Question

Wage and Tax Statement Data on Employer FICA Tax 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:

Employee	Date first employed	Monthly Salary	Monthly income tax withheld
Arnett	Jan 2	3200	448
Cruz	Oct 2	5600	1008
Edwards	Apr 16	2700	338
Harvin	Nov 1	2600	325
Nicks	Jan 16	5800	1305
Shiancoe	Dec 1	3900	605
Ward	Feb 1	6200	1333

Required:

1. Determine the amounts to be reported on each employee's Wage and Tax Statement (Form W-2) for 20Y8. Round amounts to the nearest whole dollar and enter all amounts as positive values.

Employee	Gross earnings	Federal Income tax withheld	social security tax withheld	medicare tax withheld
Arnett
Cruz
Edwards
Harvin
Nicks
Shiancoe
Ward

_________________ _______________

2. Compute 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. Round amounts to the nearest whole dollar and enter all amounts as positive values.

(a)
(b)
(c)
(d)
(e)

Answer 1

Solution:(1)

Employee	Gross earning	Federal income tax withheld	Social security tax withheld @6%	Medicare tax @1.5%
	(A)		A*6%	A*1.5%
Arnet	38400 (3200×12)	5376 (448×12)	2304	576
Cruz	16800 (5600×3)	3024 (1008×3)	1008	252
Edwards	22950 (2700×8.5)	2873 (338×8.5)	1377	344.25
Harvin	5200 (2600×2)	650 (325×2)	312	78
Nicks	66700 (5800×11.5)	15007 (1305×11.5)	4002	1000.5
Shiancoe	3900 (3900×1)	605 (605×1)	234	58.5
Ward	68200 (6200×11)	14663 (1333×11)	4092	1023

(2)

Employee	Gross earning	social security tax withheld @6%	Medicare tax@ 1.5%	State unemployment compensation (A*5.4%)with$	Federal unemployment compensation (A*0.6
	A	A*6%	A*1.5%	$10000limit	$10000limArnet
Arnet	38400 (3200×12)	2304	576	540 (10000$×5.4%)	60 (10000$×0.6%)
Cruz	16800 (5600×3)	1008	252	540 (10000$×5.4%)	60 (10000$×0.6%)
Edwards	22950 (2700×8.5)	1377	344.25	540 (10000$×5.4%)	60 (10000$×0.6%)
Harvin	5200 (2600×2)	312	78	540 (10000$×5.4%)	60 (10000$×0.6%)
Nicks	66700 (5800×11.5)	4002	1000.5	540 (10000$×5.4%)	60 (10000$×0.6%)
Shiancoe	3900 (3900×1)	234	58.5	540 (10000$×5.4%)	60 (10000$×0.6%)
Ward	68300 (6200×11)	4092	1023	540 (10000$×5.4%)	60 (10000$×0.6)
Total		13329	3332.25	3780	420

(a). 13329

(b). 3332.25

(c). 3780

(d). 420

(e). 20861.25