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    Johansen tax deduction for payroll and related taxes

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    For the current month, Johansen Rubber Cement Co. incurred
    payroll expenses as follows:

    Gross salaries and wages $675,000
    Payroll Taxes:
    OASDI (Social Security Tax) employer's share $41,850
    HI (Medicare tax)--employer's share $9,788

    Total: $726,638

    Amounts withheld and paid to the government:
    Employee income taxes withheld $(108,990)
    OASDI--employees's share $(41,850)
    HI--employees's share $(9,788)

    Total: $(160,628)

    a. What amount can Johansen Rubber Cement Co. claim as a tax deduction for
    salary and wage expense?

    b. How much can Johansen Rubber Cement Co. deduct as tax expense?

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    Solution Preview

    a. Johansen Rubber Cement Co can claim the total amount of the gross salaries and wages plus the employer share of tax expense over and above the gross ...

    Solution Summary

    The solution calculates the amount that Johansen Rubber Cement can claim as a tax deduction for salary and wage expense plus employer payroll tax expense.