Exercise 9-16 Computing payroll taxes LO P2, P3 Mester Company has 10 employees.

Question

Exercise 9-16 Computing payroll taxes LO P2, P3

Mester Company has 10 employees. FICA Social Security taxes are 6.2% of the first $113,700 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000 paid to each employee. Cumulative pay for the current year for each of its employees follows.

  

Mester Company has 10 employees. FICA Social Security taxes are 6.2% of the first $113,700 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000 paid to each employee. Cumulative pay for the current year for each of its employees follows.

a. Compute the amounts in this table for each employee and total the columns Pay Subject to FICA Social Security Pay Subject to FICA Medicare Pay Subject to FUTA Taxes Pay Subject to SUTA Taxes Cumulative Employee Ken S Tim V Steve S Christina S Kathleen K Michelle H Lori K Matt B John W Totals Pay 6,000 60,200 87,000 152,800 106,900 113,700 116,600 36,800 4,000 $684,000$ b. For the company, compute each total for: (Hint: Remember to include in those totals any employee share of taxes that the company must collect.) (Round your answers to 2 decimal places.) Tax Paid by Employee Tax Paid by Employer Total Tax FICA Social Security taxes FICA Medicare taxes FUTA taxes SUTA taxes

Explanation / Answer

Part A

372

(6000*6.2%)

87

(6000*1.45%)

36

(6000*0.6%)

324

(6000*5.4%)

3732. 40

(60200*6.2%)

872.90

(60200*1.45%)

361.20

(60200*0.6%)

378

(7000*5.4%)

5394

(87000*6.2%)

1261.50

(87000*1.45%)

522

(87000*0.6%)

378

(7000*5.4%)

7049.40

(113700*6.2%)

2215.60

(152800*1.45%)

916.80

(152800*0.6%)

378

(7000*5.4%)

6627.80

(106900*6.2%)

1550.05

(106900*1.45%)

641.40

(106900*0.6%)

378

(7000*5.4%)

7049.40

(113700*6.2%)

1648.65

(113700*1.45%)

682.20

(113700*0.6%)

378

(7000*5.4%)

7049.40

(113700.6.2%)

1690.70

(116600*1.45%)

699.60

(116600*0.6%)

378

(7000*5.4%)

2281.60

(36800*6.2%)

533.60

(36800*1.45%)

220.80

(36800*0.6%)

378

(7000*5.4%)

248

(4000*6.2%)

58

(4000*1.45%)

24

(4000*0.6%)

216

(4000*5.4%)

Part B

Employees cumulative pay FICA Social Security FICA medicare FUTA SUTA Ken 6000

372

(6000*6.2%)

87

(6000*1.45%)

36

(6000*0.6%)

324

(6000*5.4%)

Tim 60200

3732. 40

(60200*6.2%)

872.90

(60200*1.45%)

361.20

(60200*0.6%)

378

(7000*5.4%)

Steve 87000

5394

(87000*6.2%)

1261.50

(87000*1.45%)

522

(87000*0.6%)

378

(7000*5.4%)

Christina 152800

7049.40

(113700*6.2%)

2215.60

(152800*1.45%)

916.80

(152800*0.6%)

378

(7000*5.4%)

Kathleen 106900

6627.80

(106900*6.2%)

1550.05

(106900*1.45%)

641.40

(106900*0.6%)

378

(7000*5.4%)

Michelle 113700

7049.40

(113700*6.2%)

1648.65

(113700*1.45%)

682.20

(113700*0.6%)

378

(7000*5.4%)

Lori 116600

7049.40

(113700.6.2%)

1690.70

(116600*1.45%)

699.60

(116600*0.6%)

378

(7000*5.4%)

Matt 36800

2281.60

(36800*6.2%)

533.60

(36800*1.45%)

220.80

(36800*0.6%)

378

(7000*5.4%)

John 4000

248

(4000*6.2%)

58

(4000*1.45%)

24

(4000*0.6%)

216

(4000*5.4%)

Total 684000 39804 9918 4104 3186

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