Question

The total payroll of Trolley Company for the month of October, 2014 was $800,000, of which $150,000 represented amounts paid in excess of $106,800 to certain employees. $500,000 represented amounts paid to employees in excess of the $7,000 maximum subject to unemployment taxes. $150,000 of federal income taxes and $15,000 of union dues were withheld. The state unemployment tax is 1%, the federal unemployment tax is .8%, and the current F.I.C.A. tax is 7.65% on an employee’s wages to $106,800 and 1.45% in excess of $106,800. The net amount of salary paid for the period is?

Answer 1

Answer:

The net amount of salary paid for the period is $583,100

Explanation:

The computation of the net salary paid is shown below:

= Total Payroll - Social security taxes - medicare taxes - federal income taxes  - union dues

where,  

Total payroll is $800,000

Social security tax = (payroll - excess amount) × rate  

                              = ($800,000 - $150,000) × 6.2%  

                              = $40,300

The tax rate is 12.4 % which is contributed by employers and employees.  

The half is borne by the employee and the other half is born by the employer

Medicare expense = Payroll × tax rate  

                                = $800,000 × 1.45%

                                = $11,600

The other amounts would remain the same

Now put these values to the above formula  

So, the value would equal to

= $800,000 - $40,300 - $11,600 - $150,000 - $15,000

= $583,100