Monday, 17 March 2014

Lightning Electronics is a midsize manufacturer of lithium batteries. The company’s payroll records for the November 1–14 pay period show that employees earned wages totaling $100,000 but that employee income taxes totaling $14,000 and FICA taxes totaling $5,250 were withheld from this amount. The net pay was directly deposited into the employees’ bank accounts. Required: (a) What was the amount of net pay? (Omit the "$" sign in your response.) Net pay $ (b) Assuming Lighting Electronics must pay $500 of unemployment taxes for this pay period, what amount would be reported as the total payroll costs? (Omit the "$" sign in your response.) Total payroll cost $ Explanation: (a) Employees Gross salaries & wages $ 100,000 Employee income tax withheld (14,000 ) Employee FICA withheld (5,250 ) ________________________________________ ________________________________________ ________________________________________ ________________________________________ Net Pay $ 80,750 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ (b) Total payroll costs would include the gross pay ($100,000) as well as the additional employer payroll taxes ($5,250 FICA) and unemployment taxes ($500). In total, Lightning Electric would report $105,750 as the total payroll cost for this pay period.


Lightning Electronics is a midsize manufacturer of lithium batteries. The company’s payroll records for the November 1–14 pay period show that employees earned wages totaling $100,000 but that employee income taxes totaling $14,000 and FICA taxes totaling $5,250 were withheld from this amount. The net pay was directly deposited into the employees’ bank accounts.

 
Required:

(a)
What was the amount of net pay? (Omit the "$" sign in your response.)

  Net pay
$  
 
(b)
Assuming Lighting Electronics must pay $500 of unemployment taxes for this pay period, what amount would be reported as the total payroll costs? (Omit the "$" sign in your response.)

  Total payroll cost
$  
 

Explanation:
(a)  

Employees

  Gross salaries & wages
$
100,000


  Employee income tax withheld

(14,000
)

  Employee FICA withheld

(5,250
)






  Net Pay
$
80,750













(b)
Total payroll costs would include the gross pay ($100,000) as well as the additional employer payroll taxes ($5,250 FICA) and unemployment taxes ($500). In total, Lightning Electric would report $105,750 as the total payroll cost for this pay period.