ACC Tax ch 13 Lee Financial Services pays employees monthly. Payroll information

Question

ACC Tax ch 13

Lee Financial Services pays employees monthly. Payroll information is listed below for January 2016, the first month of Lee's fiscal year. Assume that none of the employees exceeded any relevant wage base. Salaries $136,394 Federal income taxes to be withheld 6,021 Federal unemployment tax rate 0.60% State unemployment tax rate (after FUTA deduction) 2.5% Social Security tax rate 6.20% Medicare tax rate 1.45% What is the net pay (credit to cash) used to record the employee’s paychecks?

Explanation / Answer

Tax Amount withheld from employees' gross pay Amount paid by employer Federal income taxes to be withheld $                                                                           6,021.00 Social Security (6.2%) $                                                                           8,456.43 $                                   8,456.43 Medicare (1.45%) tax rate $                                                                           1,977.71 $                                   1,977.71 Federal unemployment tax $                                       818.36 State unemployment tax $                                   3,409.85 Total $                                                                         16,455.14 $                                 14,662.36 Employees salaries $                                                                     1,36,394.00 Less: Amount withheld from employees' gross pay $                                                                         16,455.14 Net Pay(Credit to cash)                                                                          1,19,938.86

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