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

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

Working: 2. Working: 1. Employee Gross Federal income Social Secutiry Medicare earnings tax withheld Tax Withheld Tax Withheld Arnett 37200 5208 2232 558 Cruz 16500 11880 990 248 Edwards 22100 3900 1326 332 Harvin 5200 3900 312 78 Nicks 66700 15660 4002 1001 Shiancoe 3800 7068 228 57 Ward 71500 16776 4290 1073

ID: 2536661 • Letter: E

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

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.

Employee Date First
Employed Monthly
Salary Monthly Income
Tax Withheld Arnett Jan. 2 $3,100 $434 Cruz Oct. 1 5,500 990 Edwards Apr. 16 2,600 325 Harvin Nov. 1 2,600 325 Nicks Jan. 16 5,800 1,305 Shiancoe Dec. 1 3,800 589 Ward Feb. 1 6,500 1,398

Explanation / Answer

Working:

1. Employee Gross Federal income Social Secutiry Medicare earnings tax withheld Tax Withheld Tax Withheld Arnett 37200 5208 2232 558 Cruz 16500 11880 990 248 Edwards 22100 3900 1326 332 Harvin 5200 3900 312 78 Nicks 66700 15660 4002 1001 Shiancoe 3800 7068 228 57 Ward 71500 16776 4290 1073

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