Exercise 9-11A (Algo) Calculating employee and employer payroll taxes LO 9-5

Sky Company employed Tom Mills in Year 1. Tom earned $5,700 per month and worked the entire year. Assume the Social Security tax rate is 6 percent for the first $130,000 of earnings, and the Medicare tax rate is 1.5 percent. Toms federal income tax withholding amount is $880 per month. Use 5.4 percent for the state unemployment tax rate and 0.6 percent for the federal unemployment tax rate on the first $7,000 of earnings per employee.

1. Assume that instead of $5,700 per month Tom earned $11,500 per month. Based on this new level of income Toms new federal income tax withholding is $1,800. Answer the following questions.
   • What is Toms net pay per month?
   • What amount does Tom pay monthly in FICA payroll taxes?
   • What is the total payroll tax expense for Sky Company for January, Year 1? February, Year 1? March, Year 1? December, Year 1?

**Please show how to calculate it. Thank you! :)

\begin{tabular}{|l|ll|} \hline & \multicolumn{2}{|c|}{ Net Pay } \\ \hline January to November (per month) & $ & 8,837.50 \\ \hline December & & \\ \hline \end{tabular} \begin{tabular}{|l|ll|} \hline & \multicolumn{2}{|c|}{ FICA Payroll Tax } \\ \hline January to November (per month) & $ & 862.50 \\ \hline December & & \\ \hline \end{tabular} \begin{tabular}{|l|l|} \hline & \begin{tabular}{c} Total Employer Payroll \\ Tax \end{tabular} \\ \hline January & \\ \hline February & \\ \hline March & \\ \hline December & \\ \hline \end{tabular}