PR 11-3A Wage and tax statement data on employer FICA tax
Courtside Concepts Co. began business on January 2, 2011. 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 2012, 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% on salary. 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
Garnett Jan. 2 $ 4,400 $ 706
Kidd Oct. 1 7,200 1,442
J. O’Neal Apr. 16 3,600 506
Bryant Nov. 1 3,000 356
S. O’Neal Jan. 16 12,800 3,012
Marbury Dec. 1 5,000 856
Duncan Feb. 1 11,200 2,564
Instructions
1. Calculate the amounts to be reported on each employee’s Wage and Tax Statement (Form W-2) for 2011, arranging the data in the following form:
Employee
Gross
Earnings
Federal Income
Tax Withheld
Social Security
Tax Withheld
Medicare
Tax Withheld
2. Calculate the following employer payroll taxes for the year: (a) social security; (b) Medicare; (c) state unemployment compensation at 4.6% 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.
Answer:
1.
Gross Federal Income Social Security Medicare
Employee Earnings Tax Withheld Tax Withheld Tax Withheld
Garnett $ 52,800 $ 8,472 $ 3,168 $ 792
Kidd 21,600 4,326 1,296 324
J. O’Neal 30,600 4,301 1,836 459
Bryant 6,000 712 360 90
S. O’Neal 147,200 34,638 8,832 2,208
Marbury 5,000 856 300 75
Duncan 123,200 28,204 7,392 1,848
$23,184 $5,796
2. a. Social security tax paid by employer ........................................... $23,184
b. Medicare tax paid by employer ..................................................... 5,796
c. Earnings subject to unemployment compensation tax,
$10,000 for all employees except Bryant and Marbury.
Thus, total earnings subject to SUTA and FUTA are
$61,000 [(5 × $10,000) + $6,000 + $5,000].
State unemployment compensation tax: $61,000 × 4.6% ........... 2,806
d. Federal unemployment compensation tax: $61,000 × 0.8% ....... 488
e. Total payroll tax expense .............................................................. $32,274
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% on salary. 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
Garnett Jan. 2 $ 4,400 $ 706
Kidd Oct. 1 7,200 1,442
J. O’Neal Apr. 16 3,600 506
Bryant Nov. 1 3,000 356
S. O’Neal Jan. 16 12,800 3,012
Marbury Dec. 1 5,000 856
Duncan Feb. 1 11,200 2,564
Instructions
1. Calculate the amounts to be reported on each employee’s Wage and Tax Statement (Form W-2) for 2011, arranging the data in the following form:
Employee
Gross
Earnings
Federal Income
Tax Withheld
Social Security
Tax Withheld
Medicare
Tax Withheld
2. Calculate the following employer payroll taxes for the year: (a) social security; (b) Medicare; (c) state unemployment compensation at 4.6% 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.
Answer:
1.
Gross Federal Income Social Security Medicare
Employee Earnings Tax Withheld Tax Withheld Tax Withheld
Garnett $ 52,800 $ 8,472 $ 3,168 $ 792
Kidd 21,600 4,326 1,296 324
J. O’Neal 30,600 4,301 1,836 459
Bryant 6,000 712 360 90
S. O’Neal 147,200 34,638 8,832 2,208
Marbury 5,000 856 300 75
Duncan 123,200 28,204 7,392 1,848
$23,184 $5,796
2. a. Social security tax paid by employer ........................................... $23,184
b. Medicare tax paid by employer ..................................................... 5,796
c. Earnings subject to unemployment compensation tax,
$10,000 for all employees except Bryant and Marbury.
Thus, total earnings subject to SUTA and FUTA are
$61,000 [(5 × $10,000) + $6,000 + $5,000].
State unemployment compensation tax: $61,000 × 4.6% ........... 2,806
d. Federal unemployment compensation tax: $61,000 × 0.8% ....... 488
e. Total payroll tax expense .............................................................. $32,274
