Question

Fraction Travel has 10 employees each working 40 hours per week and earning $20 an hour. Federal income taxes are withheld at 15% and state income taxes at 6%. FICA taxes are 7.65% and unemployment taxes are 3.8% of the first $7,000 earned per employee. What is the actual payroll payment (or Salaries Payable) for the first week of January

Answer 1

Answer: $5,708

Step-by-step explanation:

Unemployment taxes are not charged to the employees so the actual payroll payment will be the gross pay less the federal, state and FICA taxes.

= Gross Pay - Federal Income tax - State Income tax - FICA taxes

Gross Pay = 10 * 40 * 20

= $8,000

Federal Income tax = (8,000 * 15%) = $1,200

State Income tax = 8,000 * 6% = $480

FICA = 8,000 * 7.65% = $612

Actual Payroll;

= 8,000 - 1,200 - 480 - 612

= $5,708