Note: In this chapter and in all succeeding work throughout the course, unless instructed otherwise, calculate hourly rates and overtime rates as follows:

1.	Carry the hourly rate and the overtime rate to 3 decimal places and then round off to 2 decimal places (round the hourly rate to 2 decimal places before multiplying by one and one-half to determine the over-time rate).
2.	If the third decimal place is 5 or more, round to the next higher cent.
3.	If the third decimal place is less than 5, simply drop the third decimal place.
	Examples:	Monthly rate $1,827 Weekly rate ($1,827 12)/52 = $421.615 rounded to $421.62 Hourly rate $421.62/40 = $10.540 rounded to $10.54 O.T. rate $10.54 1.5 = $15.81

Also, use the minimum hourly wage of $7.25 in solving these problems and all that follow.

Since the SUTA rates changes are made at the end of each year and there is much discussion about changes to the FUTA rate, the available 2015 rates were used for FUTA and SUTA.

Example 5-4

Sutcliffe Company had taxable wages totaling $87,500 in 2016. During the year, the company paid some of its state contributions after the January 31, 2017, cutoff. The penalty for tardiness is shown in the following calculation of the firms net FUTA tax for 2016:

Amount of gross FUTA tax ($87,500 6.0%)			$5,250.00
State taxable wages	$87,500
Sutcliffe's SUTA tax rate	5.4%
Sutcliffe's SUTA tax	$4,725
Breakdown of Sutcliffe's SUTA tax payments:
Before 1/31/17$3,000 100% credit			(3,000.00)
After 1/31/17$1,725 90% credit			(1,552.50)
Amount of net FUTA tax			$697.50
If the company had made timely payments of its state contributions, the amount of its net FUTA tax would have been reduced to $525, for a savings of $172.50, as follows:
Amount of gross FUTA tax ($87,500 6.0%)			$5,250.00
Total taxable wages	$87,500
Credit against tax	5.4%
Total credit			4,725.00
Amount of net FUTA tax ($87,500 0.6%)			$525.00
$697.50 $525.00 = $172.50 savings

Mary Givens and Peggy Moser are partners engaged in operating The G&M Doll Shop, which has employed the following persons since the beginning of the year:

T. Binn (general office worker)	$3,100	per month
W. Ashworth (saleswoman)	$30,000	per year
K. Bitner (stock clerk)	$280	per week
J. Vern (deliveryman)	$350	per week
A. Axel (cleaning and maintenance, part-time)	$240	per week

Givens and Moser are each paid a weekly salary allowance of $1,000.

The doll shop is located in a state that requires unemployment compensation contributions of employers of one or more individuals. The company is subject to state contributions at a rate of 3.25% for wages not in excess of $10,000. Compute each of the following amounts based upon the 41st weekly payroll period ending October 7, 2016. Round your intermediate calculations and final answers to the nearest cent. If an amount is zero, enter "0".

a. Amount of FICA taxes (OASDI and HI) to be withheld from the earnings of each person.

	Taxable Earnings	OASDI	HI
M. Givens	$1,000.00	$	$
P. Moser	1,000.00
T. Binn	$715.38
W. Ashworth	576.92
K. Bitner	280.00
J. Vern	350.00
A. Axel	240.00

b. Amount of the employer's FICA taxes for the weekly payroll.

Taxable payroll	$
OASDI	$
HI	$

c. Amount of state unemployment contributions for the weekly payroll. $

d. Amount of the net FUTA tax on the payroll. $

e. Total amount of the employer's payroll taxes for the weekly payroll. $