# Calculate payroll Breakin Away Company has three employees—a consultant, a computer programmer, and an administrator. The following payroll information is available for each employee: For the current pay period, the computer programmer worked 50 hours and the administrator worked 48 hours. The federal income tax withheld for all three employees, who are single, can be determined from the wage bracket withholding table in Exhibit 2 in the chapter. Assume further that the social security tax rate was 6.0%, the Medicare tax rate was 1.5%, and one withholding allowance is $75. Determine the gross pay and the net pay for each of the three employees for the current pay period. BuyFindarrow_forward ### Financial Accounting 15th Edition Carl Warren + 2 others Publisher: Cengage Learning ISBN: 9781337272124 #### Solutions Chapter Section BuyFindarrow_forward ### Financial Accounting 15th Edition Carl Warren + 2 others Publisher: Cengage Learning ISBN: 9781337272124 Chapter 11, Problem 10E Textbook Problem 10 views ## Calculate payrollBreakin Away Company has three employees—a consultant, a computer programmer, and an administrator. The following payroll information is available for each employee:For the current pay period, the computer programmer worked 50 hours and the administrator worked 48 hours. The federal income tax withheld for all three employees, who are single, can be determined from the wage bracket withholding table in Exhibit 2 in the chapter. Assume further that the social security tax rate was 6.0%, the Medicare tax rate was 1.5%, and one withholding allowance is$75.Determine the gross pay and the net pay for each of the three employees for the current pay period.

To determine

Calculate the gross pay and the net pay for each employees for the current pay period.

### Explanation of Solution

Gross pay: The total amount such as salary, wages, commissions, overtime, and bonus paid by the employer to an employee in each pay period is called as gross pay.

Net pay: It is the remaining amount of gross pay after all deductions.

Determine the gross pay and the net pay for each employees for the current pay period.

 Consultant Computer Programmer Administrator Regular earnings $4,000.00$2,400.00 (4) $2,000.00(9) Overtime earnings$900.00 (5) $800.00(10) Gross pay$4,000.00 $3,300.00$2,800.00 Deductions: Social security tax $240.00(1)$198.00(6) $168.00(11) Medicare tax$60.00(2) $49.50(7)$42.00(12) Federal income tax withheld $939.52(3)$757.02(8) 596.02(13) Total deductions $1,239.52$1,004.52 $806.02 Net pay$2,760.48 $2,295.48$1,993.98

Table (1)

Working note (1):

Calculate withholding social security tax for Consultant.

Social security tax = 6% ×$4,000=$240

Working note (2):

Calculate withholding Medicare tax for Consultant.

Medicare tax = 1.5% of gross salary=1.5%×$4,000=$60

Working note (3):

Calculate the amount of federal income tax withheld for Consultant.

Step 1: Calculate the amount subject to withholding.

Amount subject to withholding = Gross earnings  Withholding allowances amount= $4,000 ($75×2allowances)=$4,000$150=$3,850 Step 2: Calculate federal income tax withheld. Federal income tax withheld =$890.02 + (33%×($3,850$3,700))=$939.52 Working note (4): Calculate regular earnings for Computer Programmer. Regular pay = 40 hours ×$60 per hour=$2,400 Working note (5): Calculate overtime pay for Computer Programmer. Overtime pay = (50 hours– 40 hours)×($60×1.5)= 10 hours×$90 per hour=$900

Working note (6):

Calculate withholding social security tax for Computer Programmer.

Social security tax = 6% ×$3,300=$198

Working note (7):

Calculate withholding Medicare tax for Computer Programmer

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