Ehrlich Co. began business on January 2, 2013. Salaries werepaid to employees on the last day of each month, and socialsecurity tax, Medicare tax, and federal income tax were withheld inthe required amounts. An employee who is hired in the middle of themonth receives half the monthly salary for that month. All requiredpayroll tax reports were filed, and the correct amount of payrolltaxes was remitted by the company for the calendar year. Early in2014, before the Wage and Tax Statements (Form W-2) could beprepared for distribution to employees and for filing with theSocial Security Administration, the employees’ earnings recordswere inadvertently destroyed.
None of the employees resigned or were discharged during theyear, and there were no changes in salary rates. The socialsecurity tax was withheld at the rate of 6.0% and Medicare tax atthe rate of 1.5%. Data on dates of employment, salary rates, andemployees’ income taxes withheld, which are summarized as follows,were obtained from personnel records and payroll records:
Monthly salary is the 1st dollar amount in the row and monthlyincome tax withheld is the 2nd dollar amount
Employee Employed Monthly Monthly
Date Salary Income Tax Withheld
Arnett Nov. 16 $ 5,500 $1,008
Cruz Jan. 2 4,800 833
Edwards Oct. 1 8,000 1,659
Harvin Dec. 1 6,000 1,133
Nicks Feb. 1 10,000 2,219
Shiancoe Mar. 1 11,600 2,667
Ward Nov. 16 5,220 938
Instructions
1. Calculate the amounts to be reported on each employees’ Wageand Tax Statement (Form W-2) for 2013, arranging the data in thefollowing form: Employee Gross Earnings Federal Income Tax WitheldSocial Sec Tax Witheld Medicare Tax Witheld
2. Calculate the following employer payroll taxes for the year:(a) social security; (b) Medicare; (c) state unemploymentcompensation at 5.4% on the first $10,000 of each employees’earnings; (d) federal unemployment compensation at 0.8% on thefirst $10,000 of each employees’ earnings; (e) total.
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