Refer to the partially completed payroll register that youworked on at the end of Chapter 4. You will now computethe employer’s liability for unemployment taxes (FUTAand SUTA) for the pay of January 14. These computationswill be used at the end of Chapter 6 in recording the payrolltax entries.To compute the employer’s liability for unemploymenttaxes, proceed as follows:1. Enter each employee’s gross earnings in the TaxableEarnings—FUTA and SUTA columns.2. Total the Taxable Earnings—FUTA and SUTAcolumns.3. At the bottom of your payroll register, compute thefollowinga. Net FUTA tax. Since this is the first pay period ofthe year, none of the employees are near the $7,000ceiling; therefore, each employee’s gross earnings issubject to the FUTA tax.b. SUTA tax. Since Olney Company is a newemployer, Pennsylvania has assigned the company acontribution rate of 3.703% on the first $8,000 ofeach employee’s earnings. Employees pay 0.08% ontotal gross pay.
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