An Employee Earned $4,600 in February Working for an Employer

question 126

Multiple Choice

An employee earned $4,600 in February working for an employer. Cumulative earnings of the previous pay periods are $4,800. The FICA tax rate for Social Security is 6.2% of the first $118,500 of earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. What is the amount the employer should record as payroll taxes expense for the month of February?

• A) $351.90
• B) $483.90
• C) $581.90
• D) $230.00
• E) $110.00

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Definitions:

Double-Declining Balance Method

The Double-Declining Balance Method is an accelerated depreciation technique that doubles the rate of straight-line depreciation to allocate a asset's cost more quickly.

Activity Method

A depreciation technique that allocates the cost of an asset over its useful life based on its level of activity, such as units produced or hours used.

Sum-Of-The-Years'-Digits Method

A depreciation technique that accelerates the expense recognition, basing the calculation on a fraction of the sum of the years’ digits of the asset’s life.

Inventory System

A method used by organizations to maintain and manage the goods or materials that they stock, either for sale or for production purposes.