Question

This question has parts.

36A) An employee earned $61,600 during the year working for an employer. The FICA tax rate for Social Security is 6.2% of the first $118,500 of employee earnings per calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. What is the amount of total unemployment taxes the employee must pay?

B) A company's warehouse contents were destroyed by a flood on September 12. The following information was the only information that was salvaged:

Inventory, beginning: $29,600

Purchases for the period: $18,600

Sales for the period: $56,600

Sales returns for the period: $860

   The company's average gross profit ratio is 24%. What is the estimated cost of the lost inventory?

C) Farthington Soccer Supplies purchases merchandise from a supplier on credit, terms 2/10, n/30 for $15,300. Assume the company uses a perpetual inventory system, and records purchases using the gross method. When recording the purchase transaction in its purchases journal, Farthington would enter:

D) The chief executive officer earns $21,300 per month. As of May 31, her gross pay was $106,500. The tax rate for Social Security is 6.2% of the first $118,500 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee’s pay. What is the amount of FICA - Medicare withheld from this employee for the month of June?

Answer 1

Solution 1:

Zero

The question asks how much unemployment tax the employee must pay. The employer is the one responsible for unemployment of the employee.

Solution 2:

COGS = ($56,600 - $860) * 76% = $42,361.40
Goods available for sale = $29,600 + $18,600 = $48,200
EI = $48,200 - $42,361.40 = $5,837.60

Solution 3:

$15,300 in the Inventory Dr. column,

$15,147 in the Accounts Payable Cr. column, and

$153 in the Purchase Discount Cr. column

Solution 4:

FICA- Medicare tax = $106,500 x 0.0145 = $1544.25