11. Universal Exporting has three warehouse employees: John Abner earns $422 per week, Anne Clark earns $510 per week, and Todd Corbin earns $695 per week. The company’s SUTA tax rate is 5.4%, and the FUTA rate is 6.2% minus the SUTA. As usual, these taxes are paid on the first $7,000 of each employee’s earnings. How much FUTA tax did the company pay on these employees in the first quarter of the year? (Points : 3)
To calculate the FUTA tax paid by the company on these employees in the first quarter of the year, we need to figure out the taxable earnings for each employee and then apply the applicable FUTA tax rate.
First, we need to determine the taxable earnings for each employee, which is the smaller of their weekly earnings or $7,000.
For John Abner:
Taxable earnings = min($422, $7,000) = $422
For Anne Clark:
Taxable earnings = min($510, $7,000) = $510
For Todd Corbin:
Taxable earnings = min($695, $7,000) = $695
Next, we need to calculate the total taxable earnings for all employees by adding up the taxable earnings of each employee.
Total taxable earnings = $422 + $510 + $695 = $1,627
The FUTA tax rate is calculated as 6.2% minus the SUTA rate, which is 5.4%.
FUTA tax rate = 6.2% - 5.4% = 0.8%
Finally, we can calculate the FUTA tax paid by the company on these employees in the first quarter of the year by multiplying the total taxable earnings by the FUTA tax rate.
FUTA tax paid = Total taxable earnings x FUTA tax rate
= $1,627 x 0.008
= $13.02
Therefore, the company paid $13.02 in FUTA tax on these employees in the first quarter of the year.