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Chapter 11: 10RQ (page 604)

What payroll taxes is the employer responsible for paying?

Short Answer

Expert verified

An employer is responsible for paying FICA, SUTA, and FUTA payroll taxes.

Step by step solution

01

Employer payroll taxes

Employer payroll taxes are the taxes that are paid by the employer and are not withheld from the employees鈥� gross earnings.

An employer is liable to pay at least three payroll taxes 鈥�

02

Payroll taxes to be paid by the employer

An employer is liable to pay at least the following three taxes 鈥�

a) Employer FICA Tax: It is the tax that is paid from the employer鈥檚 side regarding OASDI and Medicare.

b) State Unemployment and Compensation Tax (SUTA): This is the tax that is imposed to compensate workers that are laid off from their work. These are paid by the employer and not deducted from the employee鈥檚 gross earnings.

c) Federal Unemployment Compensation Tax (FUTA): This tax is similar to SUTA but this is levied by the federal government, unlike SUTA which is levied by the state government.

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Most popular questions from this chapter

The following transactions of Plymouth Pharmacies occurred during 2017 and 2018:

2017

Jan. 9 Purchased computer equipment at a cost of \(12,000, signing a six-month, 9% note payable for that amount.

29 Recorded the week鈥檚 sales of \)63,000, three-fourths on credit and onefourth for cash. Sales amounts are subject to a 6% state sales tax. Ignore cost of goods sold.

Feb. 5 Sent the last week鈥檚 sales tax to the state.

Jul. 9 Paid the six-month, 9% note, plus interest, at maturity.

Aug. 31 Purchased merchandise inventory for \(9,000, signing a six-month, 10% note payable. The company uses the perpetual inventory system.

Dec. 31 Accrued warranty expense, which is estimated at 4% of sales of \)609,000.

31 Accrued interest on all outstanding notes payable.

2018

Feb. 28 Paid the six-month 10% note, plus interest, at maturity.

Journalize the transactions in Plymouth鈥檚 general journal. Explanations are not required. Round to the nearest dollar.

Samuel Industries has three employees. Each employee earns two vacation days a month. Samuel pays each employee a weekly salary of $1,250 for a five-day workweek. Requirements

1. Determine the amount of vacation expense for one month.

2. Journalize the entry to accrue the vacation expense for the month.

Accounting for warranty expense and warranty payable

The accounting records of Sculpted Ceramics included the following at January 1, 2018:

Estimated Warranty Payable

5,000 Beg. Bal

In the past, Sculpted鈥檚 warranty expense has been 9% of sales. During 2018, Sculpted made sales of \(113,000 and paid \)7,000 to satisfy warranty claims. Requirements

  1. Journalize Sculpted鈥檚 warranty expense and warranty payments during 2018. Explanations are not required.
  2. What balance of Estimated Warranty Payable will Sculpted report on its balance sheet at December 31, 2018?

How is the times-interest-earned ratio calculated, and what does it evaluate?

Coltrane Company has a \(5,000 note payable that is paid in \)1,000 installments over five years. How would the portion that must be paid within the next year be reported on the balance sheet?
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