Use this information for Harris Company to answer the following questions.

Assuming no employees are subject to ceilings for their earnings, Harris Company has the following information for the pay period of January 15-31.

$$\begin{array} { l r l c }
\text { Gross payroll } & \$ 10,000 & \text { Federal income tax withheld } & \$ 1,800 \
\text { Social security rate } & 6.0 \% & \text { Federal unemployment tax rate } & 0.8 \% \
\text { Medicare rate } & 1.5 \% & \text { State unemployment tax rate } & 5.4 \%
\end{array}$$
-Assume that social security taxes are payable at a 6.0% rate, Medicare taxes are payable at a 1.5% rate with no maximum earnings, and federal and state unemployment compensation taxes total 4.6% on the first $7,000 of earnings. If an employee earns $2,500 for the current week and the employee's year-to-date earnings before this week were $6,800, what is the total payroll tax related to the current week?
A) $187.50
B) $196.70
C) $344.50
D) $9.20

Question

Use this information for Harris Company to answer the following questions.
​
Assuming no employees are subject to ceilings for their earnings, Harris Company has the following information for the pay period of January 15-31.
​
 $$\begin{array} { l r l c } 
\text { Gross payroll } & \$ 10,000 & \text { Federal income tax withheld } & \$ 1,800 \
\text { Social security rate } & 6.0 \% & \text { Federal unemployment tax rate } & 0.8 \% \
\text { Medicare rate } & 1.5 \% & \text { State unemployment tax rate } & 5.4 \%
\end{array}$$ ​
-Assume that social security taxes are payable at a 6.0% rate, Medicare taxes are payable at a 1.5% rate with no maximum earnings, and federal and state unemployment compensation taxes total 4.6% on the first $7,000 of earnings. If an employee earns $2,500 for the current week and the employee's year-to-date earnings before this week were $6,800, what is the total payroll tax related to the current week?
A) $187.50
B) $196.70
C) $344.50
D) $9.20

Quizplus · Accepted Answer

The total payroll tax related to the current week includes social security tax, Medicare tax, and both federal and state unemployment taxes for the portion of the employee's earnings that do not exceed the $7,000 limit. - Social security tax = 6.0% of $2,500 = $150- Medicare tax = 1.5% of $2,500 = $37.50- The employee's year-to-date earnings before this week were $6,800, so only $200 of this week's earnings ($7,000 - $6,800) are subject to unemployment taxes.- Federal unemployment tax = 0.8% of $200 = $1.60- State unemployment tax = 5.4% of $200 = $10.80- Total unemployment taxes = $1.60 + $10.80 = $12.40Adding these together: $150 (social security) + $37.50 (Medicare) + $12.40 (unemployment taxes) = $199.90. However, given the options provided, the closest correct option based on the calculation method is $196.70, indicating a possible miscalculation in the provided options or an error in the interpretation. The correct approach to calculating the taxes is as described, but the precise answer should be re-evaluated based on the correct interpretation of the tax rates and the given options.

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