In: Accounting
Laura Brown worked 46 hours for Baskin Robbins during the last 7-day pay period. Laura is paid $24.00 per hour and time and a half for any hours worked past 40 hours per week. The state and federal income tax rates applicable to Laura are 12% and 22%, respectively. The FICA tax rate is 8%. Laura instructed her employer to withhold $120 for charitable contributions. In addition, Laura participates in the employer-sponsored medical plan which costs her $60 per pay period in premiums withheld. Prior to this pay period, Laura’s year to date gross earnings were $35,000.
Prepare the calculation of Laura’s net pay. (SHOW ALL WORK)
Answer
1.Statement showing Calculation of Laura's Net Pay from Baskin Robbins
Gross Earning of M/s Laura prior to Employment with Baskin Robbins $35000
Gross Earnings from Baskin Robbins $ 1176
Gross Total Earnings before Taxes $ 36176
Deductions
Charitable Contributions $ 120
Employer Sponsored Medical Plan $ 240
Total Deductions $ 360
Net Earnings Before Taxes $ 35816.00
FICA Tax @ 8% $ 2865.28
State Tax @ 12% $ 4297.92
Federal Tax @ 22% $ 7879.52
Total Taxes $ 15042.72
Net Earnings after Tax $ 20773.28
Taxes Withheld by Baskin Robbins $ 267.12
Net Tax to be Paid $ 14775.60
2.Net Payout after taxes from Baskin Robbins
Gross Earnings From Current Employer $ 1176
Deductions
Charitable contributions $ 120
Employer sponsored medical plan $ 420
Total Deductions $ 540
Net Income Before Taxes from Baskin Robins $ 636
Taxes withheld
FICA + State +Federal Taxes $ 267.12
Net Pay Out AfterTaxes from Baskin Robins $ 368.88
Workings
1. Calculation of Gross income of Laura. from Baskin Robins
Total Hours Worked = 46 Hours
Normal Pay per Hour = $24
Bonus pay for extra hours past 40 Hours = 1/2 of Time Pay/Hour
ie = $12
Therefore Total Pay = (46 Hours x $24) + (6Hours x $12)
= $1104 + $72
= $1176