Consider the following facts : Company A\'s total payroll for the month of Octob

Question

Consider the following facts : Company A's total payroll for the month of October, 2014 was $800,000$150,000 of the total represented amounts paid in excess of $106,800 to certain employees $500,000 of the total represented amounts paid to employees in excess of the $7,000 maximum subject to unemployment taxes $150,000 of federal income taxes and $15,000 of union dues were withheld from the payroll amount The state unemployment tax is 1 % The federal unemployment tax is .8%.The current FICA tax is 7.65% on employee wages up to $106,800, and 1 45% in on wages in excess of $106,800 What amount should Company A record as payroll tax expense?

Explanation / Answer

Total Payroll Costs = $ 800,000 Federal Income Taxes and Union Dues withheld from above = $ 165,000 State Unemployment Tax @ 1% on $ 500,000 = $ 5,000 Federal Unemployment Tax @ 8% on $ 500,000 = $ 40,000 FICA on Wages upto $ 106,800 = $ 8,170 FICA on Wages in excess of $ 106,800 = $ 626 Payroll Tax Expense to be recorded by Company A will be a total of $ 165,000 + $ 5,000 + $ 40,000 + $ 8,170 + $ 626 = 218796 $ Hence, none of the solutions provided are correct.

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