Sky Company employed Tom Mills in Year 1. Tom earned $5,200 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.

Required

Answer the following questions:

What is Toms net pay per month?

What amount does Tom pay monthly in FICA taxes?

What is the total payroll tax expense for Sky Company for January, Year 1? February, Year 1? March, Year 1? December, Year 1?

Assume that instead of $5,200 per month Tom earned $11,600 per month. Based on this new level of income Toms new federal income tax withholding is $2,200. 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?

A1 What is Toms net pay per month?

Tom's net pay

Per Month

A2 What amount does Tom pay monthly in FICA taxes?

Tom's Monthly FICA tax

A3 What is the total payroll tax expense for Sky Company for January, Year 1? February, Year 1? March, Year 1? December, Year 1?

	Total Employer Payroll Tax
January
February
March
December

B1 Assume that instead of $5,200 per month Tom earned $11,600 per month. Based on this new level of income Toms new federal income tax withholding is $2,200. What is Toms net pay?

	Net Pay
January to November (per month)
December

B2 Assume that instead of $5,200 per month Tom earned $11,600 per month. Based on this new level of income Toms new federal income tax withholding is $2,200. What amount does Tom pay monthly in FICA payroll taxes?

	FICA Payroll Tax
January to November (per month)
December

B3 Assume that instead of $5,200 per month Tom earned $11,600 per month. Based on this new level of income Toms new federal income tax withholding is $2,200. What is the total payroll tax expense for Sky Company for January, Year 1? February, Year 1? March, Year 1? December, Year 1?

	Total Employer Payroll Tax
January
February
March
December