Question

In: Accounting

The San Bernardino County Fair hires about 85 people during fair time. Their wages range from...

The San Bernardino County Fair hires about 85 people during fair time. Their wages range from $5.20 to $9.00. California has a state income tax of 9%. Sandy Denny earns $9.00 per hour; George Barney earns $5.20 per hour. They both worked 30 hours this week. Both are married; however, Sandy claims 2 exemptions and George claims 1 exemption. Assume a rate of 6.2% on $118,500 for Social Security and 1.45% for Medicare.

a. What is Sandy’s net pay after FIT (use the Table 7.1 and Table 7.2), Social Security tax, state income tax, and Medicare have been taken out? (Round your answer to the nearest cent.)

b. What is George’s net pay after the same deductions? (Round your answer to the nearest cent.)

c. How much more is Sandy’s net pay versus George’s net pay? (Round your answer to the nearest cent.)

Expert Solution

Answer:-

a. What is Sandy’s net pay after FIT (use the Table 7.1 and Table 7.2), Social Security tax, state income tax, and Medicare have been taken out?

Here we need to findout the Sandy's net pay .

Sandy's Net pay = Total tax per week - Social Security tax - state income tax - Medicare - FIT tax

Where

Total tax per week = $9.00 * 30 hours

= $270 per week

Total tax per week = $270 per week

Social Security tax = $270 * 6.2%

= $16.47

Social Security tax = $16.47

State income tax = $270 * 9%

= 24.3

State income tax = $24.3

Medicare tax = $270 * 1.45%

= $3.915

Medicare tax = $3.915

FIT tax = 270 - [ 73.08 * 2)

= $123.84

FIT tax = $123.84 ( no tax so, consider $0 )

Sandy's Net pay = $270 - $16.47 - $24.3 - $3.915 - $0

= 270 - 44.685

= $225.315

Sandy's Net pay = $225.315

b. What is George’s net pay after the same deductions?

Here we need to findout the George’s net pay .

George’s Net pay = Total tax per week - Social Security tax - state income tax - Medicare - FIT tax

Where

Total tax per week = $5.20 * 30 hours

= $156 per week

Total tax per week = $156 per week

Social Security tax = $156 * 6.2%

= $9.672

Social Security tax = $9.672

State income tax = $156 * 9%

= 14.04

State income tax = $14.04

Medicare tax = $156 * 1.45%

= $2.262

Medicare tax = $2.262

FIT tax = 156 - [ 73.08 * 1 )

= $82.92

FIT tax = $82.92 ( no tax . so consider $0 )

George’s Net pay = 156 - $9.672 - $14.04 - $2.262 - $0

= $156 - $25.974

= $130.026

George’s Net pay = $130.026

c. How much more is Sandy’s net pay versus George’s net pay?

Difference in Sandy’s net pay & George’s net pay = $225.315 - $130.026

= $95.289

Difference in Sandy’s net pay & George’s net pay = $95.289

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