Question

Gridiron Concepts Co. began business on January 2, 2009. 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 2010, 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 taxes. The social security tax was withheld at the rate of 6.0% on the first $100,000 of salary and Medicare tax at the rate of 1.5% on salary. 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
Brooks	Jan. 2	$ 3,400	$ 502
Croom	June 16	5,600	1,052
Fulmer	Apr. 1	2,500	310
Johnson	Oct. 1	2,500	310
Nutt	Jan. 2	10,000	2,253
Richt	Na. 16	3,600	552
Spurrier	Mar. 1	8,600	1,861

1. Calculate the amounts to be reported on each employee's Wages and Tax Statement (Form W-2) for 2009, arranging the data in the following form:

Employee	Gross Earnings	Federal Income Tax Withheld	Social Security Tax Withheld	Medicare Tax Withheld

2. Calculate the following employer payroll taxes for the year:

(a) social security;

(b) Medicare;

(c) state unemployment compensation at 4.8% on the first $8,000 of each employee's earnings;

(d) federal unemployment compensation at 0.8% on the first $8,000 of each employee's earnings;

(e) total.

Answer 1

Answer:

Calculation of the amounts to be reported on each employee's Wages and Tax Statement (Form W-2) for 2009: