Book Mart has two employees in 2013. Jessica earns $4,500 per month and Moses, the manager, earns $11,000 per month. Neither is paid extra if they work overtime. Assume the Social Security tax rate is 6 percent on the first $110,000 of earnings and the Medicare tax rate is 1.5 percent on all earnings. The federal income tax withholding is 15 percent of gross earnings for Jessica and 20 percent for Moses. Both Jessica and Moses have been employed all year.
a. Calculate the net pay for both Jessica and Moses for March.
b. Calculate the net pay for both Jessica and Moses for December.
c. Is the net pay the same in March as December for both employees? Why or why not?
d. What amounts will Book Mart report on the 2013 W-2s for each employee?