Question

Aspen Ski Resorts has 100 employees, each working 40 hours per week and earning $16 an hour. Although the company does not pay any health or retirement benefits, one of the perks of working at Aspen is that employees are allowed free skiing on their days off. Federal income taxes are withheld at 15% and state income taxes at 5%. FICA taxes are 7.65% of the first $128,400 earned per employee and 1.45% thereafter. Unemployment taxes are 6.2% of the first $7,000 earned per employee. Exercise 8-7A Part 1 Required: 1. Compute the total salary expense, the total withholdings from employee salaries, and the actual direct deposit of payroll for the first week of January Total salary expenses Total withholdings Actual direct deposit $ (3,360)

Answer 1

	Total Salary expense	=	$           64,000
	Total with holdings	=	$           12,800
	Actual direct deposits	=	$           46,304
	Workings:
	Total Salary expense	=	100 employees X 40 hours X $16
		=	$           64,000
	Total with holdings
	Federal Income taxes withheld
	$64000 X 15%	=	$             9,600
	State Income taxes withheld
	$64000 X 5%	=	$             3,200
	Total with holdings	=	$           12,800
	Total Salary expense	=	$           64,000
Less:	Total with holdings	=	$           12,800
Less:	FICA taxes from employees
	$64000 X 7.65%	=	$             4,896
	Actual direct deposits	=	$           46,304