Question

Boston has an annual payroll of $200,000. In addition, the company incurs payroll tax expense of 7% of the annual payroll. At December 31, Boston owes salaries of $8,600 and FICA and other payroll tax of $650. The company will pay these amounts early next year. What is the total amount of payroll tax expense for Boston?

1) $14,000
2) $14,650
3) $14,650.50
4) $14,650.00

Answer 1

The total payroll tax expense for Boston is calculated by adding the annual payroll tax of $14,000 (7% of $200,000) to the owed payroll tax of $650 for a total of $14,650.

Step-by-step explanation:

The total amount of payroll tax expense for Boston can be calculated by adding the 7% payroll tax on the annual payroll to the owed payroll tax at the end of the year. The company has an annual payroll of $200,000.

Payroll tax expense = 7% of annual payroll

Payroll tax expense = 0.07 * $200,000 = $14,000

The company also owes an additional payroll tax of $650 at the end of the year.

Total payroll tax expense = $14,000 (annual payroll tax) + $650 (owed payroll tax)

Total payroll tax expense = $14,650

Therefore, the total amount of payroll tax expense for Boston is $14,650, which corresponds to option (2) $14,650.