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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’ gross earnings.

An employer is liable to pay at least three payroll taxes –

02

Payroll taxes to be paid by the employer

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

a) Employer FICA Tax: It is the tax that is paid from the employer’s 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’s 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 Belkin Howe occurred during 2018:

Apr. 30 Howe is party to a patent infringement lawsuit of \(230,000. Howe’s attorney is certain it is remote that Howe will lose this lawsuit.

Jun. 30 Estimated warranty expense at 3% of sales of \)390,000.

Jul. 28 Warranty claims paid in the amount of \(6,300.

Sep. 30 Howe is party to a lawsuit for copyright violation of \)90,000. Howe’s attorney advises that it is probable Howe will lose this lawsuit. The attorney estimates the loss at \(90,000.

Dec. 31 Howe estimated warranty expense on sales for the second half of the year of \)520,000 at 3%.

Requirements

1. Journalize required transactions, if any, in Howe’s general journal. Explanations are not required.

2. What is the balance in Estimated Warranty Payable assuming a beginning balance of $0?

What payroll taxes is the employer responsible for paying?

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

Rios Raft Company had the following liabilities.

a. Accounts Payable

b. Note Payable due in 3 years

c. Salaries Payable

d. Note Payable due in 6 months

e. Sales Tax Payable

f. Unearned Revenue due in 8 months

g. Income Tax Payable

Determine whether each liability would be considered a current liability (CL) or a long-term liability (LTL).

On December 31, Weston Company estimates that it will pay its employees a 5% bonus on net income after deducting the bonus. The company reports net income of $64,000 before the calculation of the bonus. The bonus will be paid on January 15 of the next year.Requirements

1. Journalize the December 31 transaction for Weston.

2. Journalize the payment of the bonus on January 15.
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