Old Town Entertainment has two employees in Year 1. Clay earns $3,600 per month, and Philip, the

Question:

Old Town Entertainment has two employees in Year 1. Clay earns $3,600 per month, and Philip, the manager, earns $10,800 per month. Neither is paid extra for working 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 Clay and 20 percent for Philip. Both Clay and Philip have been employed all year.


Required
a. Calculate the net pay for both Clay and Philip for March.
b. Calculate the net pay for both Clay and Philip for December.
c. Is the net pay the same in March and December for both employees? Why or why not?
d. What amounts will Old Town report on the Year 1 W-2s for each employee?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Introductory Financial Accounting for Business

ISBN: 978-1260299441

1st edition

Authors: Thomas Edmonds, Christopher Edmonds

Question Posted: