Question

Problem PR - A (2018) * Peppy Company pays its employees on the 15th and last day of each month. Employees gross pay is subject to these taxes: Applied to First $128,400 ALL Wages First $7,000 First $7,000 Tax FICA - Social Security FICA Medicare Federal Unemployment State Unemployment Rate 6.20% 1.45% 0.80% 4.00% The company is preparing its payroll for the period ending October 31, 2018. Payroll records show the following information for the company's three employees. Current Pay Period Federal Tax Gross Pay thru 10/15/18 6,840 $ 19,000 123,500 Name Manny Moe Gross Pay State Tax 360 3% 2% 10% 20% 1,000 3% Jack 6,500 5% Required (using an electronic spreadsheet) 1) For the current pay period, compute the following. for each employee: a) Net pay for the current pay period. b) Total cost, to the employer, including wages. 2) In addition to the statutory deductions, each employee must pay one-half of the $200 (per pay period) cost for medical and dental insurance. Insurance is a pre-tax deduction. For the current pay period, compute net pay for each employee. What is the difference between this net pay and the net pay in (1)? 3) (Independent of Requirement #2.) Peppy Company offers a 401 (k) retirement plan to its employees. The company matches all amounts withheld from the employees up to 3% of each employee's gross pay. All employees contribute the maximum amount. Any amounts contributed currently are FICA taxable but are not taxable for federal or state income tax purposes. For the current pay period, compute net pay for each employee. What is the difference between this net pay and the net pay in (1)? Problem PR - A (2018) 2 Jack Manny Moe 360.00 $ Gross Pay $ 2,000.00 $ 6,800.00 (100.00) (100.00) Less: Health Insurance (100.00) Taxable Pay 260.00 $ 900.00 $ 6,400.00 Less Deductions: FICA-Social Security 55.80 $ 16.12 $ 229.40 FICA - Medicare 3.77 Federal Income Tax 7.80 State Income Tax 5.20 32.89 Total Deductions $ 227.11 Net Pay True Cost of Health Insurance 87.35 Manny Moe Jack 360.00 Gross Pay $ 2,000.00 $ 6,800.00 Less Deductions: FICA Social Security FICA -Medicare $ $ 22.32 229.40 5.22 Retirement Contribution 10.80 60.00 204.00 Federal Income Tax 10.48 State Income Tax 6.98 $ 55.80 Total Deductions Net Pay $ 304.20 $ True Cost of Retirement Contrib 10.26 153.00

Answer 1

ans 1
	Gross pay G	Federal tax rate F	Federal tax F*G	State tax rate S	State tax F* S	FICA -Social security G*6.2%	FICA Medicare taxes G*1.45%	Net pay G-F-S-S-M
Manny	$360	3%	$10.80	2%	7.20	$22.32	$5.22	$314.46
Moe	2000	10%	$200.00	3%	60.00	$124.00	$29.00	$1,587.00
Jack	6800	20%	$1,360.0	5%	340.00	229.40	$98.60	$4,772.00
						(132900-129200)*6.2%
Total	$9,160.00		$1,570.80		$407.20	$375.72	$132.82	$6,673.46
a)
	Net pay
Manny	$314.46
Moe	$1,587.00
Jack	$4,772.00
Total net pay	$6,673.46
b) Total cost to employer
	Gross pay (original-100)	Federal tax rate F	Federal tax F*G	State tax rate S	State tax F* S	FICA -Social security G*6.2%	FICA Medicare taxes G*1.45%	Net pay G-F-S-S-M
Manny	$260	3%	$7.80	2%	5.20	$16.12	$3.77	$227.11
Moe	1900	10%	$190.00	3%	57.00	$117.80	$27.55	$1,507.65
Jack	6700	20%	$1,340.0	5%	335.00	229.40	$97.15	$4,698.45
						(132900-129200)*6.2%
Total	$8,860.00		$1,537.80		$397.20	$363.32	$128.47	$6,433.21
Net pay as per 1	$6,673.46
Net pay as per 2	$6,433.21
Decrease in Net pay	$240.25
ans 3
	Gross pay G	Federal tax rate F	Federal tax F*G	State tax rate S	State tax F* S	FICA -Social security G*6.2%	FICA Medicare taxes G*1.45%	Retirement contribution G*3%	Net pay G-F-S-S-M
Manny	$360	3%	$10.80	2%	7.20	$22.32	$5.22	$10.80	$303.66
Moe	2000	10%	$200.00	3%	60.00	$124.00	$29.00	$60.00	$1,527.00
Jack	6800	20%	$1,360.0	5%	340.00	229.40	$98.60	$204.00	$4,568.00
						(132900-129200)*6.2%
Total	$9,160.00		$1,570.80		$407.20	$375.72	$132.82	$274.80	$6,398.66
Net pay as per 1	$6,673.46
Net pay as per 3	$6,398.66
Decrease in Net pay	$274.80
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