Question

In September Manson Paint Corporation began operations in a state that requires new employers of one or more individuals to pay a state unemployment tax of 3.5% of the first $7,000 of wages paid each employee.

An analysis of the company's payroll for the year shows total wages paid of $177,610. The salaries of the president and the vice president of the company were $20,000 and $15,000, respectively, for the four-month period, but there were no other employees who received wages in excess of $7,000 for the four months. Included in the total wages were $900 paid to a director who only attended director meetings during the year, $6,300 paid to the factory superintendent, and $2,000 in employee contributions to a cafeteria plan made on a pretax basis-for both federal and state.

In addition to the total wages of $177,610, a payment of $2,430 was made to Andersen Accounting Company for an audit it performed on the company's books in December. Compute the following; round your answers to the nearest cent.

a. Net FUTA tax	$
b. SUTA tax	$

Answer 1

ANSWER:-

Net FUTA Tax	$922.26
Net SUTA Tax	$5,379.85

Workings:-

Total Salary Paid		$1,77,610
Less:
Paid to President	$20,000
Less: Chargeable to FUTA	$7,000	$13,000
Paid to Vice President	$15,000
Less: Chargeable to FUTA	$7,000	$8,000
Paid to Directors for meeting		$900
Paid to cafeteria plan		$2,000
Total Deductions		$23,900
Net Amount Chargeable to FUTA		$1,53,710
FUTA Tax Rate		0.60%
FUTA PAYABLE		$922.26
Total Salary Paid		$1,77,610
Less:
Paid to President	$20,000
Less: Chargeable to SUTA	$7,000	$13,000
Paid to Vice President	$15,000
Less: Chargeable to SUTA	$7,000	$8,000
Paid to Directors for meeting		$900
Paid to cafeteria plan		$2,000
Total Deductions		$23,900
Net Amount Chargeable to SUTA		$1,53,710
SUTA Tax Rate		3.50%
SUTA PAYABLE		$5,379.85
a. Net FUTA tax		$922.26
b. Net SUTA tax		$5,379.85