In September 2017, Manson Paint Corporation began operations in a state that req
ID: 2561042 • Letter: I
Question
In September 2017, Manson Paint Corporation began operations in a state that requires new employers of one or more individuals to pay a state unemployment tax of 3.5% of the first $7,000 of wages paid each employee.
An analysis of the company's payroll for the year shows total wages paid of $177,610. The salaries of the president and the vice president of the company were $20,000 and $15,000, respectively, for the four-month period, but there were no other employees who received wages in excess of $7,000 for the four months. Included in the total wages were $900 paid to a director who only attended director meetings during the year, $6,300 paid to the factory superintendent, and $2,000 in employee contributions to a cafeteria plan made on a pretax basis-for both federal and state.
In addition to the total wages of $177,610, a payment of $2,430 was made to Andersen Accounting Company for an audit it performed on the company's books in December 2017. Compute the following; round your answers to the nearest cent.
a. Net FUTA tax $ b. SUTA tax $Explanation / Answer
Total Salary Paid
$1,77,610
Less:
Paid to President
$20,000
Less: Chargeable to FUTA
$7,000
$13,000
Paid to Vice President
$15,000
Less: Chargeable to FUTA
$7,000
$8,000
Paid to Directors for meeting
$900
Paid to cafeteria plan
$2,000
Total Deductions
$23,900
Net Amount Chargeable to FUTA
$1,53,710
FUTA Tax Rate
0.60%
FUTA PAYABLE
$922.26
Total Salary Paid
$1,77,610
Less:
Paid to President
$20,000
Less: Chargeable to SUTA
$7,000
$13,000
Paid to Vice President
$15,000
Less: Chargeable to SUTA
$7,000
$8,000
Paid to Directors for meeting
$900
Paid to cafeteria plan
$2,000
Total Deductions
$23,900
Net Amount Chargeable to SUTA
$1,53,710
SUTA Tax Rate
3.50%
SUTA PAYABLE
$5,379.85
a. Net FUTA tax
$922.26
b. Net SUTA tax
$5,379.85
Total Salary Paid
$1,77,610
Less:
Paid to President
$20,000
Less: Chargeable to FUTA
$7,000
$13,000
Paid to Vice President
$15,000
Less: Chargeable to FUTA
$7,000
$8,000
Paid to Directors for meeting
$900
Paid to cafeteria plan
$2,000
Total Deductions
$23,900
Net Amount Chargeable to FUTA
$1,53,710
FUTA Tax Rate
0.60%
FUTA PAYABLE
$922.26
Total Salary Paid
$1,77,610
Less:
Paid to President
$20,000
Less: Chargeable to SUTA
$7,000
$13,000
Paid to Vice President
$15,000
Less: Chargeable to SUTA
$7,000
$8,000
Paid to Directors for meeting
$900
Paid to cafeteria plan
$2,000
Total Deductions
$23,900
Net Amount Chargeable to SUTA
$1,53,710
SUTA Tax Rate
3.50%
SUTA PAYABLE
$5,379.85
a. Net FUTA tax
$922.26
b. Net SUTA tax
$5,379.85
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