Question

Paloma Co. has four employees. FICA Social Security taxes are 6.2% of the first $118,500 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. Also, for the first $7,000 paid to each employee, the company’s FUTA taxes are 0.6% and SUTA taxes are 2.15%. The company is preparing its payroll calculations for the week ended August 25. Payroll records show the following information for the company’s four employees.

						Current Week
Name	Gross Pay through Aug. 18					Gross Pay					Income Tax Withholding
Dali		$	116,150				$	4,300				$	611
Trey			116,800					1,700					274
Kiesha			9,400					680					59
Chee			3,350					630					47

In addition to gross pay, the company must pay one-half of the $106 per employee weekly health insurance; each employee pays the remaining one-half. The company also contributes an extra 8% of each employee’s gross pay (at no cost to employees) to a pension fund.

Required:

Compute the following for the week ended August 25. (Round your intermediate calculations and final answers to 2 decimal places.):

Answer 1

1) Employees' FICA Withholdings for Social Security
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	2350	6.20%	145.70
Trey	1700	6.20%	105.40
Kiesha	680	6.20%	42.16
Chee	630	6.20%	39.06
		Total	332.32
2) Employees' FICA Withholdings for Medicare
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	4300	1.45%	62.35
Trey	1700	1.45%	24.65
Kiesha	680	1.45%	9.86
Chee	630	1.45%	9.14
		Total	106.00
3) Employer's FICA Taxes for Social Security
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	2350	6.20%	145.70
Trey	1700	6.20%	105.40
Kiesha	680	6.20%	42.16
Chee	630	6.20%	39.06
		Total	332.32
4) Employer's FICA Taxes for Medicare
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	4300	1.45%	62.35
Trey	1700	1.45%	24.65
Kiesha	680	1.45%	9.86
Chee	630	1.45%	9.14
		Total	106.00
5) Employer's FUTA Taxes
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali		0.60%
Trey		0.60%
Kiesha		0.60%
Chee	630	0.60%	3.78
		Total	3.78
6) Employer's SUTA Taxes
Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali		2.15%
Trey		2.15%
Kiesha		2.15%
Chee	630	2.15%	13.55
		Total	13.55
7) Each Employee's Net (take-home) Pay
Employee	Dali	Trey	Kiesha	Chee	Total
Gross Pay	4300.00	1700.00	680.00	630.00	7310.00
Income tax withholding	611.00	274.00	59.00	47.00	991.00
FICA - Social Security	145.70	105.40	42.16	39.06	332.32
FICA - Medicare	62.35	24.65	9.86	9.14	106.00
Health Insurance	53.00	53.00	53.00	53.00	212.00
Net Pay	3427.95	1242.95	515.98	481.80	5668.68
8) Total Payroll Related Expense for Each Employee
Employee	Dali	Trey	Kiesha	Chee	Total
Gross Pay	4300.00	1700.00	680.00	630.00	7310.00
FICA - Social Security	145.70	105.40	42.16	39.06	332.32
FICA - Medicare	62.35	24.65	9.86	9.14	106.00
FUTA	0.00	0.00	0.00	3.78	3.78
SUTA	0.00	0.00	0.00	13.55	13.55
Health Insurance	53.00	53.00	53.00	53.00	212.00
Pension	344.00	136.00	54.40	50.40	584.80
Total Payroll Expense	4905.05	2019.05	839.42	798.93	8562.45