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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

Nancy Summers worked 44 hours during the past week. She is entitled to 1½ times her regular pay for all hours worked in excess of 40 during the week. Her regular rate of pay is $15.00. Social Security tax is withheld at the rate of 6.2% and Medicare tax is withheld at the rate of 1.45%; federal income tax withheld is $39; and $5 of union dues are withheld. Her net pay for the week is

(a) $593.21.

(b) $651.

(c) $690.

(d) $637.22.

To determine

Calculate the net pay of Person N.

Explanation

Net pay:

Net pay is the amount of gross pay after deduction of taxes, and any other deductions.

Calculate the net pay of Person N.

(Figure 1)

Note:

  • Regular pay of the Person N is obtained by multiplying pay rate of Person N with regular working hours for a week (40 hours).

Working Note:

(1) Calculate overtime rate of pay.

Total rate of overtime=Regular pay rate  ×(1.5 times increase in for hours worked over 40 a week)=$15×1

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