Ehrlich Co. began business on January 2, 20Y8. Salaries were paid to employees o

Question

Ehrlich Co. began business on January 2, 20Y8. Salaries were paid to employees on the last day of each month, and social security tax, Medicare tax, and federal income tax were withheld in the required amounts. An employee who is hired in the middle of the month receives half the monthly salary for that month. All required payroll tax reports were filed, and the correct amount of payroll taxes was remitted by the company for the calendar year. Early in 20Y9, before the Wage and Tax Statements (Form W-2) could be prepared for distribution to employees and for filing with the Social Security Administration, the employees' earnings records were inadvertently destroyed.

None of the employees resigned or were discharged during the year, and there were no changes in salary rates. The social security tax was withheld at the rate of 6.0% and Medicare tax at the rate of 1.5%. Data on dates of employment, salary rates, and employees’ income taxes withheld, which are summarized as follows, were obtained from personnel records and payroll records:

Required:

1.

Note: Round amounts to the nearest whole dollar and enter all amounts as positive values.

2. Calculate the following employer payroll taxes for the year: (a) social security; (b) Medicare; (c) state unemployment compensation at 5.4% on the first $10,000 of each employee’s earnings; (d) federal unemployment compensation at 0.6% on the first $10,000 of each employee’s earnings; (e) total.

Note: Round amounts to the nearest whole dollar and enter all amounts as positive values.

Calculate the amounts to be reported on each employee's Wage and Tax Statement (Form W-2) for 20Y8.

Employee Date First
Employed Monthly
Salary Monthly Income
Tax Withheld Arnett Jan. 2 $3,800 $532 Cruz Oct. 1 5,200 936 Edwards Apr. 16 2,300 288 Harvin Nov. 1 2,100 263 Nicks Jan. 16 5,650 1,271 Shiancoe Dec. 1 3,300 512 Ward Feb. 1 6,800 1,462

Explanation / Answer

Employee Gross Earnings Federal Income Tax Withheld Social Security Tax Withheld Medicare Tax Withheld Arnett                     45,600 $6,384 $2,736 $684 Cruz                     15,600 2808                      936                    234 Edwards                     19,550 2448                   1,173                    293 Harvin                        4,200 526                      252                      63 Nicks                     64,975 14,617                   3,899                    975 Shiancoe                        3,300 512                      198                      50 Ward                     74,800 16,082                   4,488                1,122 $13,682 $3,420 Employer Taxes social security Medicare SUTA FUTA Arnett 2736 684 540 60 Cruz 936 234 540 60 Edwards 1173 293 540 60 Harvin 252 63 227 25 Nicks 3898.5 975 540 60 Shiancoe 198 50 178 20 Ward 4488 1122 540 60

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