Tom's Gross Pay for the Week Is $800

question 141

Multiple Choice

Tom's gross pay for the week is $800.Tom's yearly pay is under the limit for OASDI.Assume that the rate for state and federal unemployment compensation taxes is 6.2%,and that Tom's pay year-to-date has not yet exceeded the $7,000 cap.How much is the amount of state and federal unemployment tax that Tom's employer must record as payroll tax expense and pay to the federal and state governments?

• A) $61.20
• B) $38.80
• C) $99.20
• D) $49.60

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Definitions:

Nominal Interest

The rate of interest before adjustments for inflation; the stated interest rate on a financial product.

Compounding

The process of finding the future value of a single payment or series of payments.

Amortized

The process of gradually paying off debt through a series of fixed payments over time, which cover both principal and interest.

Annual End-Of-Year Payments

Regular payments made at the end of each year, often in the context of annuities or certain types of loans where payments are deferred until the end of the period.