# Employee net pay Marsha Mellow’s weekly gross earnings for the week ended May 23 were $1,250, and her federal income tax withholding was$201.65. Assuming that the social security rate is 6% and Medicare is 1.5% of all earnings, what is Mellow’s net pay?

### Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

Chapter
Section

### Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 11, Problem 3PEB
Textbook Problem
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## Employee net payMarsha Mellow’s weekly gross earnings for the week ended May 23 were $1,250, and her federal income tax withholding was$201.65. Assuming that the social security rate is 6% and Medicare is 1.5% of all earnings, what is Mellow’s net pay?

To determine

Compute Ms. M’s net pay.

### 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.

Calculate Ms. M’s net pay as below:

 Particulars Amount Amount Gross pay $1,250.00 Withholding deductions: Federal income tax$201.65 Social security tax(1) $75.00 Medicare tax(2)$18.75 Total withholding deductions $295.40 Net pay (take-home)$954.60

Table (1)

Working note (1):

Calculate withholding social security tax...

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