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Gross payroll for the employees of Bannister Enterprises totals $100,000 per week. From this must be withheld Social Security taxes of 6.20% and Medicare taxes of 1.45%. In addition, federal and state income tax withholdings amount to 15% of gross payroll. Compute the total Employee Compensation Expense for one week: a. $100,000 b. $77,350 c. $115,000 d. $92,350 e. $107,650

Respuesta :

adioabiola

Answer:

B) $77,350

Explanation:

Gross payroll=$100,000

Social Security taxes =6.20%

6.20/100×$100,000

=0.062×$100,000

=$6,200

Medicare taxes = 1.45%.

1.45/100×$100,000

=0.145×$100,000

=$1,450

federal and state income tax =15%

15/100×$100,000

=0.15×$100,000

=$15,000

Total Withholdings=

$6,200+$1,450+$15,000

=$22,650

Total employee compensation= Gross earnings-total withhold

=$100,000-$22,650

=$77,350

Total Employee Compensation Expense: $77,350

Calculation of the employee compensation expense:

Since

Gross payroll=$100,000

Social Security taxes =6.20%

So, social security should be

= 6.20% of $100,000

= $6,200

Now

Medicare taxes = 1.45%.

So, medicare should be

= 1.45% of $100,000

=$1,450

Now

federal and state income tax =15%

So, federal & state should be

= 15% of $100,00015

=$15,000

Now finally

Total employee compensation= Gross earnings-total withhold

=$100,000-$22,650

=$77,350

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