Oaks Company has completed the payroll for January 2012, 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, 2012, 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?