BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $127,200 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 3.1% and SUTA taxes are 2.9% of the first $7,000 paid to its employee.

Answer:

a.

                Taxes to be withheld from Gross Pay (Employee - Paid Taxes)

                                      September Earnings      Tax Rate         Tax Amount

                                             Subject to Tax

Federal Income tax                                                                            $80.00

FICA - Social Security                800                       6.20%                $49.60

FICA - Medicare                          800                      1.45%                 $11.60

Total                                                                                                   $141.20

FICA - Social Security = 800 * 6.2% = $49.60

FICA - Medicare = 800 * 1.45% = $11.60

b.

Date             General Journal                                           Debit            Credit

Sep 30          Salaries Expense                                       $800

                     Federal income tax payable                                             $80

                     FICA taxes Payable - Social Security                               $49.60

                     FICA taxes Payable - Medicare                                        $11.60

                     Salaries Payable                                                               $658.80

Salaries Payable = 800 - 80 - 49.60 - 11.60 = $658.80

Should Shaun use gross pay or net pay when creating his budget? Explain your
reasoning.

Allison corporation acquired 90 percent of bretton on January 1, 2016. Of Brettons total acquisition date fair value, $60000 was allocated to undervalued equipment