PR 10-3b  Wage and tax statement data and employer FICA tax

Jocame Inc. began business on January 2, 2015. Salaries were paid to employees on the last day of each month, and social security tax, Medicare tax, and federal income tax were withheld in the required amounts. An employee who is hired in the middle of the month receives half the monthly salary for that month. All required payroll tax reports were filed, and the correct amount of payroll taxes was remitted by the company for the calendar year. Early in 2016, before the Wage and Tax Statements (Form W-2) could be prepared for distribution to employees and for filing with the Social Security Adminis- tration,  the  employees’  earnings  records  were  inadvertently destroyed.

None of the employees resigned or were discharged during the year, and there were no changes in salary rates. The social security tax was withheld at the rate of 6.0% and Medicare tax at the rate of 1.5% on salary. Data on dates of employment, salary rates, and employees’ income taxes withheld, which are summarized as follows, were obtained from personnel records and payroll   records:

 

Employee Date First Employed Monthly Salary Monthly Income Tax Withheld

 

Addai                                                  July 16                      $  8,160                           $1,704

Kasay                                                  June 1                             3,600                                     533

McGahee                                        Feb. 16                            6,420                                 1,238

Moss                                                    Jan. 1                               4,600                                     783

Stewart                                            Dec. 1                              4,500                                     758

Tolbert                                             Nov. 16                           3,250                                     446

Wells                                                 May 1                            10,500                                  2,359

 

Instructions

1.     Calculate the amounts to be reported on each employee’s Wage and Tax Statement (Form W-2) for 2015, arranging the data in the following form:

 

 

 

Employee

Gross Earnings  Federal Income Tax Withheld Social Security Tax Withheld Medicare Tax Withheld

 

 

2.     Calculate the following employer payroll taxes for the year: (a) social security;

(b) Medicare; (c) state unemployment compensation at 5.4% on the first $10,000 of each employee’s earnings; (d) federal unemployment compensation at 0.8% on the first $10,000 of each employee’s earnings; (e)    total.