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# 4277-6-8PPA

AID: 1825 | 29/03/2013

(a) The employees of Company P earn wages of \$12,000 for the two weeks ending April
15.

The amount Withheld for Federal Income Tax = \$260.00

The total taxable payroll for FICA (Federal Insurance Contribution Act) – HI
(Hospital Insurance)
= \$12,000.00

The total taxable payroll for FICA (Federal Insurance Contribution Act) – OASDI
(Old age, Survivors, and Disability Insurance program)
= \$12,000.00

The total taxable payroll for FUTA (Federal Unemployment Tax Act) and SUTA
(State Unemployment Tax Act) = \$9,800.00

The state contribution rate for the company is 2.9%

All the employees are subject to state unemployment contribution of 0.5%

Compute the amount of all deductions from employees’ payroll, and the amount of
net cash payment to the employees as follows:

Compute FICA tax(OASDI) as follows:
Taxable wages for OASDI
OASDI rate

= \$1,200.00
= 6.2%

OASDI Tax  Taxable wages  OASDI rate
 \$12,000.00 

6.2
100

 \$744.00

……(1)

Compute FICA tax (HI) as follows:
Taxable wages for HI
OASDI rate

= \$12,000.00
= 1.45%

HI Tax  Taxable wages  HI rate
 \$12,000.00 

1.45
100

 \$174.00

……(2)

The amount of Federal Income Tax = \$260.00

Compute the amount of employee contribution to state unemployment
contribution (SUTA) as follows:
Taxable wages for SUTA
Contribution rate

……(3)

= \$9,800.00
= 0.5%

Employees SUTA Tax  Taxable wages  SUTA rate
 \$9,800.00 

0.5
100

 \$49.00

……(3)

Compute the net cash (wages) paid to the employee as follows:

Net Cash  Wages  paid   Gross wages  
  FICA-OASDI  1  FICA-HI  2  
 
 
   FIT  3  Employees SUTA  
 \$744.00  \$174.00

 \$260.00  49.00 

 \$12,000.00  

 \$12,000.00  \$1,227
 \$10,773.00

……(5)

00 0.HI is a liability and increased by \$174. credit cash with \$10.Record the journal entry in the book of Company P on September 15 for payment of wages and payroll taxes as follows: Description Post.800 = 2.000.5 100  \$49.00 So.OASDI is a liability an increased by \$744.00  FICA Taxes Payable .00.9% SUTA Tax  Taxable wages  SUTA TAX rate  \$9.20 Compute the contribution of employees to state unemployment fund: Taxable salary for SUTA SUTA tax rate = \$9.8% Net FUTA Tax  Taxable wages  FUTA TAX rate  \$9.20 ……(6) Compute the amount of net FUTA tax as follows: Taxable salary for FUTA FUTA tax rate = \$9.00.800 = 0.00 Therefore.Therefore.800 = 0.00.773.8 100 ……(7) . Compute the amount of payroll taxes as follows: Total Payroll taxes  FICA-OASDI  FICA-HI  SUTA  FUTA Compute the amount of SUTA tax as follows: Compute the contribution of employer to state unemployment fund: Taxable salary for SUTA SUTA tax rate = \$9.  Employees SUTA Payable is a liability and increased by \$49. credit FICA Taxes Payable .00. Therefore.00  2.800.00.00  333.00  0.00  FICA Taxes Payable . debit wages with \$12.00Therefore. Journal Date 1 April 15 Payment of Wages Debit (\$) Credit (\$) 1 2 0 0 0 00 FICA Taxes Payable -OASDI FICA Taxes Payable -HI Employees FIT Payable Employees SUTA tax payable Cash (To record the payment of wages and the liability for the employees' taxes withheld. Therefore. Ref.9 100  \$284.000.HI with \$174. Therefore. the total amount of SUTA tax  Emploer's contribution  Employees contribution  \$284.00   \$784.OASDI with \$744.00.800. credit Employees FIT Payable with \$260.800.00.  Employees FIT Payable is a liability and increased by \$260. credit Employees SUTA Payable with \$49.  Cash is an asset and decreased by \$10.) 7 4 4 00 1 1 7 4 00 2 2 6 0 00 3 4 9 00 4 1 0 7 7 3 00 5  Wages is an expense and increased by \$12.20  \$49.00.5% SUTA Tax  Taxable wages  SUTA TAX rate  \$9.773. credit FICA Taxes Payable .

.HI with \$174. Therefore.00  \$2.  FICA Taxes Payable . debit Payroll taxes with \$2. the total Payroll taxes  FICA-OASDI  FICA-HI  SUTA  FUTA  \$744.035.035. credit FICA Taxes Payable .00.00  FICA Taxes Payable . Record the journal entry in the book of Company P on April 15 for the payroll taxes as follows: Debit (\$) Credit (\$) 2 0 3 5 00 8 7 4 4 00 1 1 7 4 00 2 3 3 3 20 7 8 4 00 6 7  Payroll taxes are expenses and increased by \$2.HI is a liability an increased by \$174.20  \$784.00  SUTA taxes payable are liabilities and increased by \$333. Therefore.OASDI is a liability and increased by \$744. credit FICA Taxes Payable .035.00  \$174.20. Therefore.So. Ref.20  FUTA taxes payable are liabilities and increased by \$784.00. Therefore.20. credit SUTA taxes payable with \$333. credit FUTA taxes payable with \$784.20 ……(8) Journal Date Description 1 April 15 Payroll Taxes FICA Taxes Payable -OASDII FICA Taxes Payable -HI SUTA taxes payable FUTA taxes payable (To record the payroll taxes and liabilities of the employer ) Post. Therefore.20.OASDI with \$744.00.00  \$333.00.