Assuming no employees are subject to ceilings for their earnings, Harris Company has the following information for the pay period of January 15 - 31.

Gross payroll $19,676

Federal income tax withheld $3,438

Social security rate 6%

Federal unemployment tax rate 0.8%

Medicare rate 1.5%

State unemployment tax rate 5.4%

Salaries Payable would be recorded in the amount of

a) $15,018.09

b) $13,542.39

c) $14,762.30

d) $19,676.00

The correct answer is B. Salaries Payable would be recorded in the amount of 13,542.39.

Explanation:

Given that the company's gross payroll is $19,676, and that a discount of $3,438 must be applied by the Federal Income Tax, a 6% social security rate, a 0.8% federal unemployment rate, a 1.5% rate Medicare and 5.4% state unemployment rate, the following gross discounts must be made to gross payroll to determine wages to be paid after taxes:

3,438 (Federal Income Tax)

19,676 x 0.06 = 1,180.56 (social security rate)

19,676 x 0.008 = 157.408 (federal unemployment rate)

19,676 x 0.015 = 295.14 (Medicare rate)

19,676 x 0.054 = 1,062.5 (state unemployment rate)

Therefore, those discounts should be subtracted from the gross payroll in order to get the Salaries Payable:

19,676 - 3,438 - 1,180.56 - 157.4 - 295.14 - 1,062.5 = 13,542.39.