Final answer:
The wages expense for the month is calculated by adding the net pay to employees ($150,000) and the Employer's NIC ($20,500), totaling $170,500. This figure represents the total cost to the employer for employee wages, including employer contributions to NIC.
Step-by-step explanation:
To calculate the wages expense for the month for a business, we need to combine the net pay to employees with the employer's share of payroll taxes, as these are costs incurred due to employing workers. The net pay to employees is given as $150,000, which is the amount after deductions for employee taxes and contributions. The deductions from an employee's wages, such as PAYE ($50,000) and Employees' NIC ($17,500), are not included in the employer's wage expense as they are withheld from the employee's gross pay. However, the Employer's NIC ($20,500) is an expense for the employer over and above the net pay.
To find the total wages expense, you add the net pay to employees to the Employer's NIC:
- Net pay to employees: $150,000
- Employer's NIC: $20,500
- Total wages expense: $150,000 + $20,500 = $170,500
Therefore, the wages expense for the month is $170,500.