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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

TOTAL COST OF EMPLOYEE B. F. Goodson employs Eduardo Gonzales at a salary of $46,000 a year. Goodson is subject to employer Social Security taxes at a rate of 6.2% and Medicare taxes at a rate of 1.45% on Gonzales’s salary. In addition, Goodson must pay SUTA tax at a rate of 5.4% and FUTA tax at a rate of 0.6% on the first $7,000 of Gonzales’s salary.

Compute the total cost to Goodson of employing Gonzales for the year.

To determine

Compute the total cost to Employer G of employing Person G for the year.

Explanation

Payroll tax:

Payroll tax refers to the tax that are equally contributed by employees and employer based on the salary and wages of an employee. Payroll tax includes taxes like federal tax, local income tax, state tax, social security tax and federal and state unemployment tax.

Compute the total cost to Employer G for employing Person G for the year.

ParticularsAmount in $
Salary of Person G46,000.00
Social Security tax ($46,000 × 0.062)2,852.00
Medicare tax ($46,000 × 0

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