BOOK: Financial Accounting, 14th Edition, Carl S. Warren; Jim Reeve; Jonathan Duchac

Module 12 Current Liabilities and Payroll Problem 11-3A

Wage and Tax Statement Data on Employer FICA Tax

Ehrlich Co. began business on January 2, 2015. 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 2016, 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	Nov. 16	$5,500		$944
Cruz	Jan. 2	4,800		833
Edwards	Oct. 1	8,000		1,592
Harvin	Dec. 1	6,000		1,070
Nicks	Feb. 1	10,000		2,350
Shiancoe	Mar. 1	11,600		2,600
Ward	Nov. 16	5,220		876

Required:

1. Calculate the amounts to be reported on each employee's Wage and Tax Statement (Form W-2) for 2015. 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.

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