Question

BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $118,500 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA taxes are 2.9% of the first $7,000 paid to its employee.

	Gross Pay through August					Gross Pay for September
a.		$	6,600				$	500
b.			18,400					2,300
c.			112,400					8,200

Exercise 9-5 Computing payroll taxes LO P2, P3

Compute BMX’s amounts for each of these four taxes as applied to the employee’s gross earnings for September under each of three separate situations (a), (b), and (c). (Round your answers to 2 decimal places.)

a) Tax September Earnings Subject to Tax Tax Rate Tax Amount FICA—Social Security $500.00 6.20% $31.00 FICA—Medicare 500.00 1.45% 7.25 FUTA 400.00 0.60% 2.40 SUTA 400.00 2.90% 11.60 b) Tax September Earnings Subject to Tax Tax Rate Tax Amount FICA—Social Security $2,300.00 6.20% $142.60 FICA—Medicare 2,300.00 1.45% 33.35 FUTA 0 SUTA 0 c) Tax September Earnings Subject to Tax Tax Rate Tax Amount FICA—Social Security FICA—Medicare FUTA 0 SUTA 0

Answer 1

Answer a.
Taxes to be Withheld From Gross Pay (Employee Paid Taxes)
	September Earnings Subject to Tax	Tax Rate	Tax Amount
FICA Social Security Tax	500.00	6.20%	31.00
FICA Medicare	500.00	1.45%	7.25
FUTA	400.00	0.60%	2.40
SUTA	400.00	2.90%	11.60

Answer b.
Taxes to be Withheld From Gross Pay (Employee Paid Taxes)
	September Earnings Subject to Tax	Tax Rate	Tax Amount
FICA Social Security Tax	2,300.00	6.20%	142.60
FICA Medicare	2,300.00	1.45%	33.35
FUTA	-	0.60%	-
SUTA	-	2.90%	-

Answer c.
Taxes to be Withheld From Gross Pay (Employee Paid Taxes)
	September Earnings Subject to Tax	Tax Rate	Tax Amount
FICA Social Security Tax	6,100.00	6.20%	378.20
FICA Medicare	8,200.00	1.45%	118.90
FUTA	-	0.60%	-
SUTA	-	2.90%	-