Question

An employee receives an hourly wage rate of $15, with time and a half for all hours worked in excess of 40 during the first week of the calendar year. Payroll data for the first week of the calendar year are as follows: hours worked, 48; federal income tax withheld, $120; social security tax rate, 6%; and Medicare tax rate, 1.5%; state unemployment tax, 5.4% on the first $7,000; federal unemployment tax, 0.8% on the first $7,000. What is the net amount to be paid to the employee?

Answer 1

Answer:

The net amount paid to the employee is US$ 553.14

Explanation:

Let's calculate the net amount paid to this employee:

1. Total hours worked = 48

Hourly wage for the first 40 hours = US$ 15

Hourly wage for hours over 40 hours = US$ 22.50 ( time and a half for all hours worked in excess of 40)

Total wage = 40* 15 + 8 * 22.50

Total wage = 600 + 180 = 780

This employee earned US$ 780 before taxes and discounts

2. Taxes and withheld are:

Federal income tax withheld= US$ 120

Social security tax rate= 6%

6% * 780 = 780 * 0.06 = US$ 46.80

Medicare tax rate= 1.5%

1.5% * 780 = 780 * 0.015 = US$ 11.70

State unemployment tax= 5.4% on the first $7,000

5.4% * 780 = 780 * 0.054 = US$ 42.12

Federal unemployment tax = 0.8% on the first $7,000

0.8% * 780 = 780 * 0.008 = US$ 6.24

Total taxes and withheld = 120 + 46.80+ 11.70+ 42.12 + 6.24

Total taxes and withheld = US$ 226.86

3. Net amount paid to this employee:

Net paid = Total earnings - taxes and withheld

Net paid = 780 - 226.86

Net paid = US$ 553.14