Assume an employee of Rocco Rock Company earns $3,100 of gross wages during the current...
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Accounting
| Assume an employee of Rocco Rock Company earns $3,100 of gross wages during the current pay period and is required to remit to the government $310 for income tax and $155 for FICA. Consider the following two procedures for paying the employee: |
| Procedure 1 (Withholdings) | Procedure 2 (No Withholdings) | |||
| Rocco Rock Company pays the employee net wages of $2,635 and will remit income taxes and FICA on behalf of the employee. | Rocco Rock Company pays the employee gross wages of $3,100 and the employee is responsible for remitting income taxes and FICA himself. | |||
| Required: | ||
| 1-a. | Ignoring employer payroll taxes, under each procedure calculate (a) the total labor cost for the company and (b) the amount of cash the employee will have after satisfying all responsibilities to the government. | |
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