Question

Exercise 9-11 (Static) Computing payroll taxes LO P2, P3

Mest Company has nine employees. FICA Social Security taxes are 6.2% of the first $132,900 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000 paid to each employee. Cumulative pay for the current year for each of its employees follows.

Employee	Cumulative Pay		Employee	Cumulative Pay		Employee	Cumulative Pay
Ken S	$	6,000	Julie W	$	143,500	Christina S	$	135,400
Tim V		40,400	Michael M		106,900	Kitty O		36,900
Steve S		87,000	Zach R		132,900	John W		4,000

a. Compute the amounts in this table for each employee.
b. For the company, compute each total for FICA Social Security taxes, FICA Medicare taxes, FUTA taxes, and SUTA taxes.

Answer 1

Employee	Cumulative Pay	Pay Subject to FICA Social Security	Pay Subject to FICA Medicare	Pay Subject to FUTA Taxes	Pay Subject to SUTA Taxes
Ken S	6,000	6,000	6,000	6,000	6,000
Tim V	40,400	40,400	40,400	7,000	7,000
Steve S	87,000	87,000	87,000	7,000	7,000
Julie W	1,43,500	1,32,900	1,43,500	7,000	7,000
Michael M	1,06,900	1,06,900	1,06,900	7,000	7,000
Zach R	1,32,900	1,32,900	1,32,900	7,000	7,000
Christina S	1,35,400	1,32,900	1,35,400	7,000	7,000
Kitty O	36,900	36,900	36,900	7,000	7,000
John W	4,000	4,000	4,000	4,000	4,000
Totals	6,93,000	6,79,900	6,93,000	59,000	59,000

(b)
	Tax paid by Employee	Tax paid by Employer	Total
FICA Social Security Taxes	$ 42,153.80 ($ 679,900 x 6.2%)	$ 42,153.80 ($ 679,900 x 6.2%)	$ 84,307.60
FICA Medicare Taxes	$ 10,048.50 ($ 693,000 x 1.45%)	$ 10,048.50 ($ 693,000 x 1.45%)	$ 20,097
FUTA Taxes	$ 0	$ 354 ($ 59,000 x 0 .6%)	$ 354
SUTA Taxes	$ 0	$ 3,186 ($ 59,000 x 5.4%)	$ 3,186