Exam 9: Payroll

A draw is an advance that need not be repaid if the commission does not exceed the draw.

The FICA tax now requires separate reporting for Social Security and Medicare.

Alvin Shore sells jewelry at Ross Jewelers. Ross pays Alvin $10.50 per hour plus a 6% commission on all sales. Assume Alvin works 36 hours and had sales of $4,900. What is Alvin's gross pay?

Circular E from the Internal Revenue Service contains many tax tables.

Andrew Buckner earns $2,580 biweekly. He is married and claims three exemptions. What is Andrew's federal income tax? Use the percentage method (Use the tables in the handbook to answer this question).

Jeff Jones earns $1,200 per week. He is married and claims four withholding allowances. The Social Security rate is 6.2% on $128,400, and Medicare is 1.45%. Each paycheck, his employer also deducts $42.50 for health insurance. What is his net pay? (Calculate FIT by percentage method.)

Molly Flynn, an accountant at Coor Company, earned $127,400 from January to June. In July, Molly earned $4,600. Assume a tax rate of 6.2% for Social Security on the first $128,400 and a Medicare rate of 1.45%. How much is the tax for Social Security and Medicare?

Caroline earns $290.25 per week plus 4% commission on all sales. If Caroline had sales of $11,500 for each week, what was her total pay for the month assuming a four-week month?

The W-4 is used strictly to calculate Social Security and Medicare taxes.