Question

An employee receives an hourly rate of $350, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 50; federal income tax withheld, $3,371; cumulative earnings for year prior to current week, $140,700; social security tax rate, 6.2% on maximum of $142,800; and Medicare tax rate, 1.45% on all earnings.

Answer 1

The net payable amount to the employee is $14,244.7.

Reason :

The net pay will be calculated by deducting the social security tax, medicare tax, and federal income tax from the employee's gross earnings. The federal and state unemployment compensation tax is not deducted as these are the employer's expenses that are borne by the company.

Calculation:

Gross Earning = (Total No. of hours worked × Rate per Hour) + Excess hours worked × ( Rate per Excess Hour × Rate per Hour)

= 40 × $350 + (50 − 40) × 1.45 ×$ 350

= $ 19,075

Social Security Tax = Total Earning × Social Security Tax Rate

= $ 19,075 × 6.2 %

= $ 1182.65

Medicare Tax = Total Earning × Medicare Tax Rate

= $ 19,075 × 1.45%

= $ 276.587

Net Earning or Net Pay =Total Earning − Federal Income tax −Social Security Tax − Medicare Tax

= $ 19,075− $3,371 − $ 1182.65 −$276.587

=$ 14,244.7

Therefore,  The net payable amount to the employee is $14,244.7.

Payroll Accounting:

Payroll Accounting is related to the expenses accrued by the employer. Employee compensation data is being filed and tracked by payroll accounting from paychecks and taxes the employers have withheld from the employee's salaries or wages.

Learn more about Payroll accounting :

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