1/ An employee earns $5,650 per month working for an employer. The FICA tax rate

Question

1/ An employee earns $5,650 per month working for an employer. The FICA tax rate for Social Security is 6.2% of the first $118,500 of earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The employee has $188 in federal income taxes withheld. The employee has voluntary deductions for health insurance of $156 and contributes $78 to a retirement plan each month. What is the amount the employer should record as payroll taxes expense for the employee for the month of January? (Round your intermediate calculations to two decimal places.)

Multiple Choice

$959.23

$655.40

$384.20

$771.23

$350.30

2/ During August, Boxer Company sells $349,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 3% of the selling price. The warranty liability account has a credit balance of $12,100 before adjustment. Customers returned merchandise for warranty repairs during the month that used $8,700 in parts for repairs. The entry to record the customer warranty repairs is:

Multiple Choice

Debit Estimated Warranty Liability $8,700; credit Parts Inventory $8,700.

Debit Warranty Expense $10,470; credit Estimated Warranty Liability $10,470.

Debit Estimated Warranty Liability $10,470; credit Parts Inventory $10,470.

Debit Warranty Expense $8,700; credit Estimated Warranty Liability $8,700.

Debit Warranty Expense $7,070; credit Estimated Warranty Liability $7,070.

Explanation / Answer

Social Security taxes 350.30 =5650*6.2% Medicare taxes 81.93 =5650*1.45% FUTA tax 33.90 =5650*0.6% SUTA tax 305.10 =5650*5.4% Payroll taxes expense 771.23 Option 4 is correct 2 Debit Estimated Warranty Liability $8,700; credit Parts Inventory $8,700. Option 1 is correct

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