Question

age 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	$3,400		$476
Cruz	Oct. 1	5,400		972
Edwards	Apr. 16	2,900		363
Harvin	Nov. 1	2,400		300
Nicks	Jan. 16	5,650		1,271
Shiancoe	Dec. 1	3,200		496
Ward	Feb. 1	6,200		1,333

Required:

1. Calculate the amounts to be reported on each employee's Wage and Tax Statement (Form W-2) for 20Y8.

Note: 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. Calculate 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.

Note: Round amounts to the nearest whole dollar and enter all amounts as positive values.

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

Answer 1

Answer 1
Employee	Gross earning		Federal Income Tax Withheld		Social Security tax withheld	Medicare tax withheld
	Amount($)	total	Amount($)	Total($)	(6%*G.E)	G*1.5%
Arnett	3400*12	40800	476*12	5712	2448	612
Cruz	5400*3	16200	972*3	2916	972	243
Edwards	2900*8.5	24650	363*8.5	3086	1479	369.75
Harvin	2400*2	4800	300*2	600	288	72
Nicks	5650*11.5	64975	1271*11.5	14617	3,899	974.625
Shiancoe	3200*1	3200	496*1	496	192	48
Ward	6200*11	68200	1333*11	14663	4092	1023
Total		2E+05		42090	13369.5	3342.375
		2E+05
Answer 2
Social Security tax withheld						$13369.5
Medicare tax withheld						$3342.38
state unemployment compensation at 5.4% on the first $10,000 o
10000*5(3200+4800)*5.4%						$3132
Federal Unemployment compensation tax on first $10000
10000*5(3200+4800)*.6%						$348
TOTAL						$20191.88