Question

BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $127,200 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 3.1% and SUTA taxes are 2.9% of the first $7,000 paid to its employee.

Answer 1

a.

Taxes to be withheld from Gross Pay (Employee - Paid Taxes)

September Earnings Tax Rate Tax Amount

Subject to Tax

Federal Income tax $80.00

FICA - Social Security 800 6.20% $49.60

FICA - Medicare 800 1.45% $11.60

Total $141.20

FICA - Social Security = 800 * 6.2% = $49.60

FICA - Medicare = 800 * 1.45% = $11.60

b.

Date General Journal Debit Credit

Sep 30 Salaries Expense $800

Federal income tax payable $80

FICA taxes Payable - Social Security $49.60

FICA taxes Payable - Medicare $11.60

Salaries Payable $658.80

Salaries Payable = 800 - 80 - 49.60 - 11.60 = $658.80