Question

In: Accounting

An employee earns $16 per hour and 1.5 times that rate for all hours in excess...

An employee earns $16 per hour and 1.5 times that rate for all hours in excess of 40 hours per week. Assume that the employee worked 55 hours during the week. Assume that the social security tax rate was 6.0%, the Medicare tax rate was 1.5%, and federal income tax to be withheld was $230.00.

a. Determine the gross pay for the week.
$

If applicable, round your final answer to two decimal places.

b. Determine the net pay for the week.
$

Expert Solution

a)

In the given case , An employee earns $16 per hour for the first 40 hours of work per week and 1.5 times for the excess hours worked. Pay rate in excess = $16 * 1.5 = $24

Thus Gross pay will be : a) Normal pay for 40 hours = 40* 16 per hour = $640

b) Overtime pay for remaining 15 hours = 15 * $ 24 per hour = $ 360.

Thus Gross Pay for the week = $ 1000 ( $640 + $ 360 ).

b)

.Net Pay is calculated by reducing the deductions from the gross pay. Here the deductions are Social security taxes, Medicare taxes , Federal income taxes withheld.

so Social secutity taxes = Gross pay * Social security tax rate = $1000 * 6% = $ 60.

So Medicare taxes = Gross pay * Medicare tax rate = $1000 * 1.5% = $ 15

and federal income tax withheld is already given = $ 230.

Thus Net Pay for the week = Gross Pay - Social security taxes - Medicare taxes - federal income tax withheld.

Net Pay for the week = $1000 - $60 - $15 - $230 = $ 695.

Net Pay for the week = $ 695.

ekkarill92 answered 1 year ago

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