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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

Rick Davis, an employee of ABC Motors, worked 42 hours during the week of September 12 through 18. His rate of pay is $30 per hour, and he receives time-a-half for work in excess of 40 hours per week. Rick is married and claims zero allowances on his W-4 form. Rick’s YTD earnings before this pay period are $47,250, and his wages are subject to the following deductions:

  1. a. Federal income tax (use the table in Figure 3, pages 293-294).
  2. b. Social Security tax at 6.2 percent, with a wage limit of $118,500.
  3. c. Medicare tax at 1.45 percent.
  4. d. Medical insurance premium (after tax), $75.
  5. e. United Way contribution, $25.

Required

Compute Rick’s regular pay, overtime pay, gross pay, and net pay.

To determine

Calculate the regular pay, overtime pay, gross pay and net pay of Person R.

Explanation

Payroll:

Payroll refers to the total amount that is required to be paid by the company to its employees during a week, month or other period. It is the financial record of the wages and bonus, net pay, salary and deductions of a company’s employees.

Calculate the regular pay, overtime pay, gross pay and net pay of Person R.

ParticularsHours×RateAmount in $
Regular pay40×$30.00 $1,200.00
Overtime pay2×(1) $45.00$90.00
Gross pay   1,290.00

(Table 1)

Particulars Amount in $
Gross pay $1,290.00
Less: Federal income tax$152.00 
          Social Security tax  ($1,290.00×6.2%)$79.98 
          Medicare tax ($1,290×1

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