1.50 points You did not receive full credit for this question in a previous atte

Question

1.50 points You did not receive full credit for this question in a previous attempt Old Town Entertainment has two employees in 2016. Clay eams $3,600 per month and Philip, the manager eams $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 eamings and the Medicare tax rate is 1.5 percent on all eamings. 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. Net P Clay Philip b. Calculate the net pay for both Clay and Philip for December Net Pay Clay This is a numeric cell, so please enter numbers only. c. Is the net pay the same in March and December for both employees? Yes O No d. What amounts will Old Town report on the 2016 W-2s for each employee? Amount Appearing on W-2 for 2016 Clay Box 1 Box 2 Box 3 Box 4 Box 5 Wages, tips, and other compensation Federal income tax withheld Social security wages Social security tax withheld Medicare wages and tips

Explanation / Answer

ans c No, it is not same

Explanation

ans a Clay Gross salary 3600 Less: Federal Income tax withheld (15%*3600) 540 Social security taxes (6%) 216 Medicare Tax (1.5%) 54 Net pay 2790 Philip Gross salary 10800 Less: Federal Income tax withheld (20%) 1620 Social security taxes (6%) 648 Medicare Tax (1.5%) 162 Net pay 8370 Ans b Clay Gross salary 3600 Less: Federal Income tax withheld (15%*3600) 540 Social security taxes (6%) 216 Medicare Tax (1.5%) 54 Net pay 2790 Philip Gross salary 10800 Less: Federal Income tax withheld (20%) 1620 Social security taxes (6%) 0 Medicare Tax (1.5%) 162 Net pay 9018 As social security taxes is paid for first $110000. hence in month of November and december it exceeded $110000 Till oct it was $108000. In Novemeber tax will be paid on $2000 and in December it would be Ni;

ans c No, it is not same

Explanation

For Clay Net pay is same For Philip Net pay is not same ans d Clay Wages (3600*12) 43200 Federal Income Tax 6480 Social security wages 43200 Social security tax withheld (6%) 2592 medicare wages 43200 Medicare wtax withheld 626.4 Pilip Wages (10800*12) 129600 Federal Income Tax 19440 Social security wages 110000 Social security tax withheld (6%) 6600 medicare wages 129600 Medicare wtax withheld 1879.2

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