An Employee Earned $4,600 in February Working for an Employer

question 112

Multiple Choice

An employee earned $4,600 in February working for an employer. The FICA tax rate for Social Security is 6.2% of the first $118,500 earned during each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The employee has $644 in federal income taxes withheld and has voluntary deductions for health insurance of $50 and contributes 10% of gross pay to a retirement plan each month. The employer pays the $200 remainder of the health insurance premium and an equal amount of contribution to the retirement fund. What is the amount of net pay for the employee for the month of February?

• A) $3,446.00
• B) $3,496.00
• C) $3,604.10
• D) $3,094.10
• E) $2,634.10

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Definitions:

Unamortized Premium

The portion of a bond premium that has not yet been amortized or recognized in the financial statements over time.

Par Value

The face value of a bond or stock, as specified by the issuing company, which is the minimum price at which the securities can be issued initially.

Retirement

The process of removing an asset from service after its useful life has ended, often involving its disposal or sale.

Gain or Loss

The financial result from a transaction that leads to an increase (gain) or decrease (loss) in the asset value of a company.