Question

The total payroll of Concord Company for the month of October, 2017 was $1020000, of which $185000 represented amounts paid in excess of $118500 to certain employees. $601000 represented amounts paid to employees in excess of the $7300 maximum subject to unemployment taxes. $185000 of federal income taxes and $18400 of union dues were withheld. The state unemployment tax is 1%, the federal unemployment tax is .8%, and the current F.I.C.A. tax is 7.65% on an employee’s wages to $118500 and 1.45% in excess of $118500. What amount should Concord record as payroll tax expense?

Answer 1

Answer: $74,102

Step-by-step explanation:

FICA Tax Payable by Employer = 1.45% × $185,000 + 7.65% × ($1,020,000 - $185000)

= $2,682.5 + $63,877.5

= $66,560

State unemployment tax = 1% × ($1,020,000 - $601,000)

= $4,190

Federal unemployment tax = 0.8% × ($1,020,000 - $601,000)

= $3,352

Payroll tax expense = FICA Tax Payable by Employer + state unemployment tax + federal unemployment tax

= $66,560 + $4,190 + $3,352

= $74,102