Question

Wage and Tax Statement Data on Employer FICA Tax

Ehrlich Co. began business on January 2, 20Y8. 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 20Y9, 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%. 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
Arnett	Jan. 2	$3,800		$532
Cruz	Oct. 1	5,400		972
Edwards	Apr. 16	2,300		288
Harvin	Nov. 1	2,200		275
Nicks	Jan. 16	5,650		1,271
Shiancoe	Dec. 1	3,300		512
Ward	Feb. 1	6,900		1,484

Required:

1. Calculate the amounts to be reported on each employee's Wage and Tax Statement (Form W-2) for 20Y8.

Note: Round amounts to the nearest whole dollar and enter all amounts as positive values.

Employee	Gross Earnings		Federal Income Tax Withheld		Social Security Tax Withheld		Medicare Tax Withheld
Arnett	$		$		$		$
Cruz
Edwards
Harvin
Nicks
Shiancoe
Ward
					$		$

2. Calculate the following employer payroll taxes for the year: (a) social security; (b) Medicare; (c) state unemployment compensation at 5.4% on the first $10,000 of each employee’s earnings; (d) federal unemployment compensation at 0.6% on the first $10,000 of each employee’s earnings; (e) total.

Note: Round amounts to the nearest whole dollar and enter all amounts as positive values.

(a)	$
(b)	$
(c)	$
(d)	$
(e)	$

Answer 1

Employee	Gross	Federal Income	Social Security	Medicare
	Earnings	Tax Withheld	Tax Withheld	Tax Withheld
Arnett	45600	6384	2736	684
Cruz	16200	2916	972	243
Edwards	21850	2736	1311	327.75
Harvin	4400	550	264	66
Nicks	64975	14616.5	3898.5	974.625
Shiancoe	3300	512	198	49.5
Ward	75900	16324	4554	1138.5
	232225	44039	13934	3483
a	Social Security Payable	13934
b	Medicare tax Payable	3483
c	SUTA	3116
d	FUTA	346
e	Total	20879