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age and Tax Statement Data on Employer FICA Tax Ehrlich Co. began business on January 2. Salaries were paid to employees...

age and Tax Statement Data on Employer FICA Tax

Ehrlich Co. began business on January 2. 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 the following year, 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% on salary. 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 Nov. 16 $3,600 $533
Cruz Jan. 2 5,900 1,109
Edwards Oct. 1 2,400 298
Harvin Dec. 1 2,400 298
Nicks Feb. 1 9,900 2,228
Shiancoe Mar. 1 3,900 597
Ward Nov. 16 8,900 1,922

Required:

1. Calculate the amounts to be reported on each employee's Wage and Tax Statement (Form W-2). Enter amounts to the nearest cent if required. Enter all amounts as positive numbers.

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 0.8% on the first $10,000 of each employee's earnings; (e) total. Round your answers to two decimal places.

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

Solutions

Expert Solution

1EmployeeDuration
Gross
earnings
Federal
income
tax
withheld
Social
security
tax
withheld
Medicare
tax
withheld




a
a*6%a*1.5%

ArnettFor 1.5 months
540053332481




(3600*1.5)



CruzFor 12 months
70800110942481062




(5900*12)



EdwardsFor 3 months
7200298432108




(2400*3)



HarvinFor 1 month
240029814436




(2400*1)



NicksFor 11 months
108900222865341633.5




(9900*11)



ShiancoeFor 10 months
390005972340585




(3900*10)



WardFor 1.5 months
133501922801200.25




(8900*1.5)



Total

2470506985148233705.75








2






(a)Social security tax= $14823 (refer previous table)

(b)Medicare tax= $ 3705.75 (refer previous table)

cState unemployment compensation-5.4% on first $10000









EmployeeGross
earnings
If >10000
restricted
to $10000
State
unemployment
compensation
@ 5.4%






aa*5.4%



Arnett54005400291.6



Cruz7080010000540



Edwards72007200388.8



Harvin24002400129.6



Nicks10890010000540



Shiancoe3900010000540



Ward1335010000540



Total247050
2970


(d)Federal unemployment compensation-0.8% on first $10000









EmployeeGross
earnings
If >10000
restricted
to $10000
Federal
unemployment
compensation
@ 0.8%




Arnett5400540043.2



Cruz708001000080



Edwards7200720057.6



Harvin2400240019.2



Nicks1089001000080



Shiancoe390001000080



Ward133501000080



Total247050
440










eTotal=14823+3705.75+2970+440=$ 21938.75

















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