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24 June, 15:20

Bonnie claims single with 2 federal withholding allowances, and contributes state tax of 20% of her federal tax. Below is a copy of Bonnie's biweekly statement of earnings. Bonnie knows that her gross earnings and federal tax are correct, but she thinks that her net pay is not correct.

Earnings

Deductions

Week Ended

Regular

FED. SOC. MED STATE

WITH. WITH. CARE. WITH.

NET PAY

4/15

$760.00

$50.00 $47.12 $110.20 $10.00

$542.68

Using the fact that Social Security is 6.2% and Medicare is 1.45% of gross pay, explain why the given net pay is not correct. Determine how the error can be corrected, and what the net pay should be.

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Answers (2)
  1. 24 June, 16:09
    0
    Answer: the Medicare withholding to be about 1/4 of the Social Security withholding. It is about 3 times that amount, so is clearly in error.
  2. 24 June, 16:53
    0
    You expect the Medicare withholding to be about 1/4 of the Social Security withholding. It is about 3 times that amount, so is clearly in error. The error can be corrected by making the Medicare withholding 11.02, instead of 110.20. This will increase net pay by $99.18 to $641.86.

    a) Medicare withholding is 10 times what it should be

    b) The error can be corrected by making Medicare withholding what it should be: $11.02.

    c) After correction, net pay is $641.86.
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