Question

Donohue Professional Services has three employees-a consultant, a computer programmer, and an administrator. The following payroll information is available for each employee: Consultant Computer Programmer Administrator Regular earnings rate $2,910 per week $30 per hour $40 per hour Overtime earnings rate Not applicable 1.5 times hourly rate 2 times hourly rate Number of withholding allowances 3 2 1 For the current pay period, the computer programmer worked 60 hours and the administrator worked 50 hours. The federal income tax withheld for all three employees, who are single, can be determined by adding $340.44 to 28% of the difference between the employee's amount subject to withholding and $1,687.00. Assume further that the social security tax rate was 6%, the Medicare tax rate was 1.5%, and one withholding allowance is $70

Answer 1

Calculation for Gross Pay :-

Consultant :-

Gross Pay = Regular Pay + Overtime Pay

= $2910 + Nil

= $2910

Computer Programmer:-

Gross Pay = Regular Pay + Overtime Pay

= 60*$30+ (60-40)*$30*1.5

= $1800 + $900

= $2700

Administrator :-

Gross Pay = Regular Pay + Overtime Pay

= (50*$40) + (50-40)*$40*2

= $2000 + $800

= $2800

Calculation for Net Pay :-

Consultant :-

Particulars	Amount ($)
Gross Pay	2910
Less : Deductions
Federal Income Tax withholding	($335.70)
Social Security Tax ($2910* 6%)	(174.60)
Medicare Tax ($2910 * 1.5%)	(43.65)
Net Pay	2356.05

Computer Programmer :-

Particulars	Amount ($)
Gross Pay	2700
Less : Deductions
Federal Income Tax withholding	($302.10)
Social Security Tax ($2700 * 6%)	(162)
Medicare Tax ($2700 * 1.5%)	(40.5)
Net Pay	$2195.40

Administrator :-

Particulars	Amount ($)
Gross Pay	2800
Less : Deductions
Federal Income Tax withholding	($342.90)
Social Security Tax ($2800 * 6%)	(168)
Medicare Tax ($2800* 1.5%)	(42)
Net Pay	$2247.10

Working Note 1 : -

Calculation of Federal Income Tax Withholding For :-

Particulars	Consultant	Computer Programmer	Administrator
Gross Weekly Pay	$2910	$2700	$2800
No. of Withholding Allowances	3	2	1
Value of one Allowance	$70	$70	$70
Amount to be Deducted	$210	$140	$70
Amount Subject to Withholding	$2700	$2560	$2730
Initial Withholding	$85.62	$85.62	$85.62
Bracket % over bracket excess	($2700-$1658)*24%	($2560-$1658)*24%	($2730-$1658)*24%
	$250.08	$216.48	$257.28
Amount Withheld	$335.70	$302.10	$342.90

: Taken As per 2018 Current Period-Single Person-Head Of Household..

ethod Tables for Income Tax Withholding (For Wages Paid in 2018) TABLE 1—WEEKLY Payroll Period (a) SINGLE person (including head of household)— (b) MARRIED person— If the amount of wages (after subtracting withholding allowances) is: The amount of income tax to withhold is: If the amount of wages (after subtracting withholding allowances) is: The amount of income tax to withhold is: Not over $71 .......... $0 Not over $222 ......... $0 Over— But not over— of excess over— Over— But not over— of excess over— $71 —$254 . . $0.00 plus 10% —$71 $222 —$588 . . $0.00 plus 10% —$222 $254 —$815 . . $18.30 plus 12% —$254 $588 —$1,711 . . $36.60 plus 12% —$588 $815 —$1,658 . . $85.62 plus 22% —$815 $1,711 —$3,395 . . $171.36 plus 22% —$1,711 $1,658 —$3,100 . . $271.08 plus 24% —$1,658 $3,395 —$6,280 . . $541.84 plus 24% —$3,395 $3,100 —$3,917 . . $617.16 plus 32% —$3,100 $6,280 —$7,914 . . $1,234.24 plus 32% —$6,280 $3,917 —$9,687 . . $878.60 plus 35% —$3,917 $7,914 —$11,761 . . $1,757.12 plus 35% —$7,914 $9,687 ............ $2,898.10 plus 37% —$9,687 $11,761 ........... $3,103.57 plus 37% —$11,761