Chapter 8 Lesson 2 Activity

What is the employee's gross pay?

Answer explanation

What is the employee's gross pay?

$15/hour * 8=$120 is the earnings from holiday

$15/hour * 8 =$120 is the earnings from vacation

$15/hour * 64 hours= $960 is the regular earnings

The total earnings is 120+120+960=$1200 which is the gross income (before tax or any deductions)

How much local tax is deducted from the paycheck?

Answer explanation

How much local tax is deducted from the paycheck?

Look at the left upper corner on the pay stub, the city name is "ANYCITY", that's why at the bottom row of the category of Taxes, it is listed as "AC" with $23.13. Because "AC" is the abbreviation of Anycity, which is the local city's name. (Not every city would charge city tax, depends on the city & state)

How much state tax is deducted from the paycheck?

Answer explanation

How much state tax is deducted from the paycheck?

From the left upper corner, you will see AR as the state name. That's why there is one row listed as "AR" under the category of Taxes.

How much federal tax is deducted from the paycheck?

Answer explanation

How much federal tax is deducted from the paycheck?

$157.39

How much did the employee contribute to FICA?

Answer explanation

How much did the employee contribute to FICA?

$76.98

How much did the employee contribute to Medicare?

Answer explanation

How much did the employee contribute to Medicare?

$14.67

How much did the employee pay for other (nontax) deductions?

Answer explanation

How much did the employee pay for other (nontax) deductions?

$91.75

What was the purpose of the other deductions?

Answer explanation

What was the purpose of the other deductions?

Health insurance and 401(K)

What percentage of the employee's income is set aside for retirement?

Answer explanation

What percentage of the employee's income is set aside for retirement?

the amount of contribution to 401(K) is $48, which goes towards to the employee's retirement. Since the current monthly gross income is $1200, you should use the 401(K) contribution divides by the monthly gross income. 48 / 1200 = 0.04= 4%

What is the employee's net pay?

Answer explanation

What is the employee's net pay?

$810.69