Grammy's Bakery had the following information for the pay period ending June 30: $$\begin{array} { | l | c | c | r | c | c | }
\hline \begin{array} { c }
\text { Employee } \
\text { Name }
\end{array} & \begin{array} { c }
\text { Pay } \
\text { rate }
\end{array} & \begin{array} { c }
\text { Hours } \
\text { worked }
\end{array} & \begin{array} { c }
\text { Cumulative } \
\text { earnings }
\end{array} & \text { Department } & \begin{array} { c }
\text { Federal } \
\text { income tax } \
\text { withheld }
\end{array} \
\hline \text { P. Ganster } & \$ 2,000 & \text { Salaried } & \$ 12,000 & \text { Kitchen } & \$ 86.00 \
\hline \text { T. Baker } & 10.00 / \mathrm { hr } & 50 & 6,500 & \text { Office } & 22.00 \
\hline
\end{array}$$ $$\text { Assume: }$$ FICA-OASDI applied to the first $106,800 at a rate of 6.2%.
FICA-Medicare applied at a rate of 1.45%.
FUTA applied to the first $7,000 at a rate of 0.8%.
SUTA applied to the first $7,000 at a rate of 5.6%.
State income tax is 3.8%.
Given the above information,what would be the amount applied to FUTA Payable?

Question

Grammy's Bakery had the following information for the pay period ending June 30: $$\begin{array} { | l | c | c | r | c | c | } 
\hline \begin{array} { c } 
\text { Employee } \
\text { Name }
\end{array} & \begin{array} { c } 
\text { Pay } \
\text { rate }
\end{array} & \begin{array} { c } 
\text { Hours } \
\text { worked }
\end{array} & \begin{array} { c } 
\text { Cumulative } \
\text { earnings }
\end{array} & \text { Department } & \begin{array} { c } 
\text { Federal } \
\text { income tax } \
\text { withheld }
\end{array} \
\hline \text { P. Ganster } & \$ 2,000 & \text { Salaried } & \$ 12,000 & \text { Kitchen } & \$ 86.00 \
\hline \text { T. Baker } & 10.00 / \mathrm { hr } & 50 & 6,500 & \text { Office } & 22.00 \
\hline
\end{array}$$ $$\text { Assume: }$$ FICA-OASDI applied to the first $106,800 at a rate of 6.2%.
FICA-Medicare applied at a rate of 1.45%.
FUTA applied to the first $7,000 at a rate of 0.8%.
SUTA applied to the first $7,000 at a rate of 5.6%.
State income tax is 3.8%.
Given the above information,what would be the amount applied to FUTA Payable?

Quizplus · Accepted Answer

FUTA (Federal Unemployment Tax Act) tax is applied to the first $7,000 of an employee's earnings at a rate of 0.8%. Both employees have cumulative earnings that exceed $7,000, so the FUTA tax would have been applied to the first $7,000 of their earnings. Since the question does not specify the period's earnings for P. Ganster, we calculate for T. Baker, whose pay for the period is $500 (50 hours * $10/hr). However, since both employees' cumulative earnings exceed $7,000, the FUTA tax would have already been applied to the first $7,000 of their earnings, and no additional FUTA tax is due for this pay period. Therefore, there is no additional amount to be applied to FUTA Payable for this pay period, making the correct choice "Credit $4.00" based on the options provided, assuming the question intended to ask about the FUTA tax already accounted for in the cumulative earnings.

Grammy's Bakery Had the Following Information for the Pay Period