Old Town Entertainment has two employees in Year 1. Clay earns $4,800 per month, and Philip, the manager, earns $10,400 per month. Neither is paid extra for working overtime. Assume the Social Security tax rate is 6 percent on the first $110,000 of earnings and the Medicare tax rate is 1.5 percent on all earnings. The federal income tax withholding is 16 percent of gross earnings for Clay and 20 percent for Pilip. Both Clay and Philip have been employed all year. Required a. Calculate the net pay for both Clay and Philip for March. b. Calculate the net pay for both Clay and Philip for December. c. Is the net pay the same in March and December for both employees? d. What amounts will Old Town report on the Year 1 W-2s for each employee?
Old Town Entertainment has two employees in Year 1. Clay earns $4,800 per month, and Philip, the manager, earns $10,400 per month. Neither is paid extra for working overtime. Assume the Social Security tax rate is 6 percent on the first $110,000 of earnings and the Medicare tax rate is 1.5 percent on all earnings. The federal income tax withholding is 16 percent of gross earnings for Clay and 20 percent for Pilip. Both Clay and Philip have been employed all year. Required a. Calculate the net pay for both Clay and Philip for March. b. Calculate the net pay for both Clay and Philip for December. c. Is the net pay the same in March and December for both employees? d. What amounts will Old Town report on the Year 1 W-2s for each employee?
Century 21 Accounting General Journal
11th Edition
ISBN:9781337680059
Author:Gilbertson
Publisher:Gilbertson
Chapter13: Accounting For Payroll And Payroll Taxes
Section13.3: Reporting Withholding And Payroll Taxes
Problem 1WT
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Transcribed Image Text:Reg A and B
Req C
Reg D
nts
What amounts will Old Town report on the Year 1 W-2s for each employee? (Do not round intermediate calculations.)
eBook
Amount Appearing on W-2 for Year 1
Clay
Вох 1
Wages, tips, and other compensation
Вох 2
Federal income tax withheld
Box 3
Social security wages
Box 4
Social security tax withheld
Box 5
Medicare wages and tips
Box 6
Medicare tax withheld
Philip
Box 1
Wages, tips., and other compensation
Box 2
Federal income tax withheld
Box 3
Social security wages
Box 4
Social security tax withheld
Box 5
Medicare wages and tips
Box 6
Medicare tax withheld
Req C
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Old Town Entertainment has two employees in Year 1. Clay earns $4,800 per month, and Philip, the manager, earns $10,400
per month. Neither is paid extra for working overtime. Assume the Social Security tax rate is 6 percent on the first $110,000 of
earnings and the Medicare tax rate is 1.5 percent on all earnings. The federal income tax withholding is 16 percent of gross
earnings for Clay and 20 percent for Philip. Both Clay and Philip have been employed all year.
Required
a. Calculate the net pay for both Clay and Philip for March.
b. Calculate the net pay for both Clay and Philip for December.
c. Is the net pay the same in March and December for both employees?
d. What amounts will Old Town report on the Year 1 W-2s for each employee?
Complete this question by entering your answers in the tabs below.
Req A and B
• Req C
Req D
What amounts will Old Town report on the Year 1 W-2s for each employee? (Da not raund intermediate calculations.)
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