FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Wage and tax statement data on employer FICA tax

Obj. 2 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

$ 6,000

$1,132

Cruz

Jan. 2

4,600

798

Edwards

Oct. 1

8,200

1,632

Harvin

Dec. 1

5,900

1,052

Nicks

Feb. 1

12,000

2,820

Shiancoe

Mar. 1

11,300

2,533

Ward

Nov. 16

4,700

788

 

 

 

 

Instructions

  1. Compute the amounts to be reported for the year on each employee’s Wage and Tax Statement (Form W-2), arranging the data as follows. Round all amounts to the nearest cent.
  2.  

Employee

Gross Earnings

Federal Income Tax Withheld

Social Security Tax Withheld

Medicare Tax Withheld

 

 

  1. Compute 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, and (e) total. Round all amounts to the nearest cent.

 

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