Oaks Company has completed the payroll for January 2015, reflecting the following data:
Salaries and wages earned ..... $86,000
Employee income taxes withheld .. 10,000
FICA payroll taxes* ......... 6,000
*Assessed on both employer and employee (i.e., $6,000 each).
Required:
1. What amount of additional labor expense to the company was due to tax laws? What was the amount of the employees’ take-home pay?
2. List the liabilities and their amounts reported on the company’s January 31, 2015, balance sheet, assuming the employees have been paid.
3. Would employers react differently to a 10 percent increase in the employer’s share of FICA than to a 10 percent increase in the basic level of salaries? Would financial analysts react differently?