Directions

Scenario 1:Watchdog Company has 10 employees.The template given has each work and their cumulative earnings as of November 2, the company's last payday.The template also gives the gross amount of earnings to be paid each worker on the next payday, November 9.

In the state where Watchdog is located, the tax rates and bases are as follows:

Tax on Employees:

FICA - OASDI6.2% on the first $127,200

FICA - HI1.45% on total earnings

SUTA0.5% on the first $8,000

Tax on employers:

FICA - OASDI6.2% on the first $127,200

FICA - HI1.45% on total earnings

FUTA 0.6% on first $7,000

SUTA2.8% on the first $8,000

Directions

In the appropriate columns of the given template, do the following:

1.Compute the amount to be withheld from each employee's earnings on November 9, for (a) FICA - OASDI, (b) FICA - HI and (c) SUTA, and determine the total employee taxes.

2.Record the portion of each employee's earnings that is taxable under FICA, FUTA and SUTA, and calculate the total employer's payroll taxes on the November 9 payroll.

Scenario 2:McNamara, Inc. has a semimonthly payroll of $53,00 on September 15, 20XX.

The total payroll is taxable under FICA Taxes - HI

$50,400 is taxable under FICA Taxes - OASDI

$7,300 is taxable under FUTA and SUTA. The state contribution rate for the company is 3.1%.

Federal incomes taxes withheld is $6,995.

State income taxes withheld is $1,010.

Directions

In the template provided, complete the following:

1.Journalize the payment of the wages and record the payroll taxes on September 15.

2.Assume that the employees of McNamara, Inc., must also pay state contributions (disability insurance) of 1% on the taxable payroll of $24,100 and that the employees contributions are to be deducted by the employer.Journalize the September 15 payment of wages assuming that the state contributions of the employees are kept in a separate account.