Payroll is usually the largest expense of a business. It is very important to know what taxes to withhold and when they need to be paid. It is also very important to be able to record payroll transactions correctly.

This assessment assesses your ability to determine which taxes to withhold and how to record them correctly in your company books.

1. Payroll Problem

Guides Co. has four employees. FICA Social Security taxes are 6.2% of the first $110,100 paid to each employee, and FICA Medicare taxes are1.45% of gross pay. Also, for the first $7,000 to each employee the company’s FUTA taxes are 0.8% and SUTA taxes are 1.75%. The company is preparing its payroll calculations for the week ended September 30. Payroll Records show the following for the company’s four employees. 

In addition to gross pay, the company must pay one-half of the $50 per employee weekly health insurance; each employee pays the remaining one-half. The company also contributes an extra 5% of each employee’s gross pay (at no cost to employees) to a pension fund. Employees also paid 6.88 per week in union dues with the exception of Ahmed since he is a supervisor.

Required:

Compute the following for the week ended September 30 (round amounts to the nearest cent).

1. Each employee’s FICA withholdings for Social Security.

Each employee’s FICA withholding for Medicare.

Employer’s FICA taxes for Social Security.

Employer’s FICA taxes for Medicare.

Employer’s FUTA taxes.

Employer’s SUTA taxes.

Each employee’s net (take-home) pay.

Employer’s total payroll-related expense for each employee.

  

Gross Pay Through 9/23 Current pay Gross Pay Name Income Tax State Tax Withholding Withholding $198 Ahmed $108,500 $2,500 $50 Carlos 36,650 6,650 22,200 1.515 182 45 June 475 32 10 Marie 1,000 68 23