Question

The payroll records of Barnes Co. provided the following data for the current weekly pay period ended March 12.

Employees Earnings to End of Previous Week Gross Pay Federal Income Taxes Medical Insurance Deduction Union Dues United Way

R.Short $5,800 $800 $120 $35 $10 $10

L. Skyler 6,850 1,000 180 35 10 15

C. Richard 12,900 1,440 404 35 10 10

The Earnings to End of Previous Week are gross earnings for the year prior to the current weekly pay period ended March 12. Assume that the Social Security portion of the FICA taxes is 6.2% on the first $117,000 and the Medicare portion is 1.45% of all wages paid to each employee for this pay period. The federal and state unemployment tax rates are 0.8% and 5.4%, respectively, on the first $7,000 paid to each employee. Calculate the net pay for each employee. The federal and state unemployment taxes are paid by the employer only. (Check: Net pay for R. Short should be a number between $550 and $575. (3 points)

Answer 1

Compute the net pay for each employee as follows:

Particulars	Short	Skyler	Richard
Gross Pay (a)	$800.00	$1,000.00	$1,440.00
Deduct:
Social security @ 6.2%	$49.60	$62.00	$89.28
Medicare tax @ $1.45%	$11.60	$14.50	$20.88
Federal income tax	$120.00	$180.00	$404.00
Medical insurance deduction	$35.00	$35.00	$35.00
Union dues	$10.00	$10.00	$10.00
United way	$10.00	$15.00	$10.00
Total deductions (b)	$236.20	$316.50	$569.16
Net pay of each employee (a − b)	$563.80	$683.50	$870.84
Note:
	Short	Skyler	Richard
Gross Pay	$800.00	$1,000.00	$1,440.00
×   Social security rate	6.20%	6.20%	6.20%
Social security deduction	$49.60	$62.00	$89.28
Gross Pay	$800.00	$1,000.00	$1,440.00
×   Medicare rate	1.45%	1.45%	1.45%
Social security deduction	$11.60	$14.50	$20.88