Question

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	$3,800		$532
Cruz	Oct. 1	5,200		936
Edwards	Apr. 16	2,300		288
Harvin	Nov. 1	2,100		263
Nicks	Jan. 16	5,650		1,271
Shiancoe	Dec. 1	3,300		512
Ward	Feb. 1	6,800		1,462

Required:

1.

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)	$

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

Answer 1

Employee	Gross Earnings	Federal Income Tax Withheld	Social Security Tax Withheld	Medicare Tax Withheld
Arnett	45,600	$6,384	$2,736	$684
Cruz	15,600	2808	936	234
Edwards	19,550	2448	1,173	293
Harvin	4,200	526	252	63
Nicks	64,975	14,617	3,899	975
Shiancoe	3,300	512	198	50
Ward	74,800	16,082	4,488	1,122
			$13,682	$3,420

Employer Taxes	social security	Medicare	SUTA	FUTA
Arnett	2736	684	540	60
Cruz	936	234	540	60
Edwards	1173	293	540	60
Harvin	252	63	227	25
Nicks	3898.5	975	540	60
Shiancoe	198	50	178	20
Ward	4488	1122	540	60