In this activity, you will be given data that includes hourly wages, hours worked, overtime hours, tax deductions, and other deductions. You will calculate the net pay for employees and identify the control procedures for payroll systems depending on the execution and recording of the related transactions.

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Directions and Analysis

Task 1: Calculating Net Pay

Calculate the following net pay for each of the given set of employees. Deduct the following tax payments from gross earnings to calculate net pay.

Social Security tax: 6.2% of gross earnings

Medicare tax: 1.45% of gross earnings

Federal income tax: 10% of gross earnings

Part A

Use this formula to calculate gross earnings for each employee:

Gross Earnings = Hours Worked Hourly Pay

Type your response in the table:

Monthly Earnings
	Employee 1	Employee 2	Employee 3	Employee 4	Employee 5
Hours Worked	85	72	96	81	80
Hourly Pay ($)	30.00	24.00	28.00	30.00	26.00
Gross Earnings ($)

Part B

Calculate each tax as a percentage of gross monthly earnings. Then, subtract the total taxes from gross earnings to calculate net pay.

Type your response in the table:

	Employee 1	Employee 2	Employee 3	Employee 4	Employee 5
Gross Earnings ($) (from table above)
Social Security 6.2% (Gross Earnings 0.062)
Medicare 1.45% (Gross Earnings 0.0145
Federal Income Tax 10% (Gross Earnings 0.10)
Total Taxes
Net Pay = Gross Earnings - Total Taxes

Task 2: Control Procedures for Payroll Systems

Identify control procedures for payroll systems depending on the execution and recording of the related transactions.

Type your response here: