Paloma Co. Stars has four employees. FICA Social Security taxes are 6.2% of the first $110,100 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay.

Problem 9-2A Payroll expenses, withholdings, and taxes LO P2, P3

Paloma Co. Stars has four employees. FICA Social Security taxes are 6.2% of the first $110,100 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. Also, for the first $7,000 paid to each employee, the company’s FUTA taxes are 0.8% and SUTA taxes are 2.15%. The company is preparing its payroll calculations for the week ended August 25. Payroll records show the following information for the company’s four employees.

    

					Current Week
Name	Gross Pay through 8/18				Gross Pay				Income Tax Withholding
Dahlia		$	107,200			$	3,800			$	276
Trey			36,250				820				137
Kiesha			8,000				630				57
Chee			1,950				580				48

In addition to gross pay, the company must pay one-half of the $60 per employee weekly health insurance; each employee pays the remaining one-half. The company also contributes an extra 8% of each employee’s gross pay (at no cost to employees) to a pension fund.

Required:

Compute the following for the week ended August 25 (Round your answers to 2 decimal places.):   Explanation: 1. Each employee’s FICA withholdings for Social Security.    Dahlia Trey Kiesha Chee Total   Maximum base $ 110,100 $ 110,100 $ 110,100 $ 110,100   Earned through 8/18 107,200 36,250 8,000 1,950      Amount subject to tax $ 2,900 $ 73,850 $ 102,100 $ 108,150                                                Earned this week $ 3,800 $ 820 $ 630 $ 580                                                Subject to tax 2,900 820 630 580   Tax rate 6.20 % 6.20 % 6.20 % 6.20 %      Social Security tax $ 179.80 $ 50.84 $ 39.06 $ 35.96 $ 305.66         2. Each employee’s FICA withholdings for Medicare.    Dahlia Trey Kiesha Chee Total   Earned this week $ 3,800 $ 820 $ 630 $ 580   Tax rate 1.45 % 1.45 % 1.45 % 1.45 %      Medicare tax $ 55.10 $ 11.89 $ 9.14 $ 8.41 $ 84.54         3. Employer's FICA taxes for Social Security.    Dahlia Trey Kiesha Chee Total   Amount from Social Security $ 179.80   $ 50.84   $ 39.06 $ 35.96 $ 305.66       4. Employer's FICA taxes for Medicare.    Dahlia Trey Kiesha Chee Total   Amount from Medicare $ 55.10    $ 11.89 $ 9.14 $ 8.41 $ 84.54         5. Employer's FUTA taxes.    Dahlia Trey Kiesha Chee Total   Maximum base $ 7,000 $ 7,000 $ 7,000 $ 7,000   Earned through 8/18 107,200 36,250 8,000 1,950      Amount subject to tax 0 0 0 5,050                                                Earned this week $ 3,800 $ 820 $ 630 $ 580                                                Subject to tax 0 0 0 580   Tax rate 0.8 % 0.8 % 0.8 % 0.8 %      FUTA tax $ 0.00 $ 0.00 $ 0.00 $ 4.64 $ 4.64         6. Employer's SUTA taxes.    Dahlia Trey Kiesha Chee Total   Subject to tax (from 5) $ 0 $ 0 $ 0 $ 580   Tax rate 2.15 % 2.15 % 2.15 % 2.15 %      SUTA tax $ 0.00 $ 0.00 $ 0.00 $ 12.47 $ 12.47         7. Each employee's net (take-home) pay.    Dahlia Trey Kiesha Chee Total  Gross earnings $ 3,800.00 $ 820.00 $ 630.00 $ 580.00 $ 5,830.00     Less                                            FICA Social Sec. tax (179.80 ) (50.84 ) (39.06 ) (35.96 ) (305.66)    FICA Medicare taxes (55.10 ) (11.89 ) (9.14 ) (8.41 ) (84.54)    Withholding taxes (276.00 ) (137.00 ) (57.00 ) (48.00 ) (518.00)    Health insurance (30.00 ) (30.00 ) (30.00 ) (30.00 ) (120.00)       Take-home pay $ 3,259.10 $ 590.27 $ 494.80 $ 457.63 $ 4,801.80      8. Employer's total payroll-related expense for each employee. Dahlia Trey Kiesha Chee Total   Gross earnings $ 3,800.00    $ 820.00 $ 630.00 $ 580.00 $ 5,830.00     Plus   FICA Social Sec. tax 179.80 50.84 39.06 35.96 305.66     FICA Medicare taxes 55.10 11.89 9.14 8.41 84.54     FUTA tax 0.00 0.00 0.00 4.64 4.64     SUTA tax 0.00 0.00 0.00 12.47 12.47     Health insurance 30.00 30.00 30.00 30.00 120.00     Pension contrib. (8%) 304.00 65.60 50.40 46.40 466.40        Total payroll expense $ 4,368.90 $ 978.33 $ 758.60 $ 717.88 $ 6,823.71