Payroll Accounting 2016 Chapter 5 Continuing Problem A

Refer to the partially completed payroll register that you worked on at the end of Chapter 4. You will now compute the employers liability for unemployment taxes (FUTA and SUTA) for the pay of January 14. These computations will be used at the end of Chapter 6 in recording the payroll tax entries.

To compute the employers liability for unemployment taxes, proceed as follows:

1. Enter each employees gross earnings in the Taxable EarningsFUTA and SUTA columns.

2. Total the Taxable EarningsFUTA and SUTA columns. 3. At the bottom of your payroll register, compute the following:

a. Net FUTA tax. Since this is the first pay period of the year, none of the employees are near the $7,000 ceiling; therefore, each employees gross earnings is subject to the FUTA tax.

b. SUTA tax. Since Kipley Company is a new employer, Pennsylvania has assigned the company a contribution rate of 3.6785% on the first $9,500 of each employees earnings. Employees pay 0.07% on total gross pay. Note: Retain your partially completed payroll register for use at the end of Chapter