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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Compute payroll

An employee earns $28 per hour and 1.5 limes that rate for all hours in excess of 40 hours per week. Avsume that I he employee worked 46 hours during the week. Assume that the FICA tax rate is 7.5% and that federal income tax of $200 was withheld.
a.Determine the gross pay for the week.
b. Determine The net pay for the week.

To determine

Concept Introduction:

Accounting is an art of recording, classifying, analyzing and summarizing the financial statement to produce meaningful information and reports.

Accounting is done with two methods as follows:

Cash Basis accounting:

Under the cash basis accounting all the cash receipts for the period are considered as revenue and all the cash payments for the period are considered as expenses and net income us calculated.

Accrual Basis accounting:

Under the accrual basis, the revenue and expenses are recorded accreting to their accrual for the given period and cash receipts and payments are not considered to decide their accrual. The net income is calculated using the accrued revenue and accrued expenses belonging to the particular period.

To Calculate:

The Gross and Net Pay

Explanation

The Gross and Net Pay is calculated as follows:

Gross pay = (40 * 28) +((46-40)*28*1...

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