[tnyfn20]

This question has me stumped and the explanation does not really help either. I am hoping one of you guys can help. The question is CPA-00706.

For the week ended June 30, Free paid gross wages of 20,000, from which federal income taxes of 2,500 and FICA were withheld. All wages paid were subject to FICA tax rates of 7% each for the employee and employer. Free makes all payroll- related disbursements from a special payroll checking account. What amount should Free have deposited in the payroll checking account to cover net payroll and related payroll taxes for the week ended June 30?

a) 21,400

b) 22,800

c) 23,900

d) 25,300

The correct answer is A. Why are the federal taxes not included in this amount?

AUD- 78
BEC 79
FAR 78
REG 77

[kb24]

The employer has to pay FICA on top of the employee's gross pay which is why $1400 is added. However, the federal income tax and the employee's share of FICA comes out of the employee's gross pay so they are already included in the $20K.

FAR 4/1/11 - 89
AUD 4/15/11 - 85
REG 4/29/11 - 80
BEC 5/13/11 - 85

[futurecpa0010]

Yea, I remember that question. @kb24 You give a better answer than what was probably given.

[Anonymous]

great answer kb24! thanks so much really helped me understand

[Author]

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