Question

Crimson Inc. had a gross payroll of $51,000. The FICA tax was 6.95% of the gross payroll. Federal and state withholding was $2,250 and $460, respectively. Which of the following amounts will be reported as a decrease on the statement of cash flows of the company?

Round your answer to whole number.
a. $44,746
b. $51,000
c. $50,166
d. $51,835

Answer 1

Option A: $44746

Explanation:

Step 1:

6.95% of $51000 = 3544.5

Federal & state Tax = $2250 + $460 = $2710

Total tax deducted = 3544.5 + 2710 = $6254.5

So,

$51000 - $6254.5 = $44,746.