A company has 24 employees who are paid on a monthly basis. For the most recent month, gross earnings were $78,000, of which $27,000 is subject to employment taxes. The federal unemployment tax rate is .8% and the state unemployment rate is 5.4%. Federal income taxes are withheld at the rate of 20% of total earnings. All earnings are subject to FICA taxes of 8%.
What is the employees' net pay?
A) $56,160
B) $55,944
C) $54,486
D) $62,400

Question

Quizplus · Accepted Answer

The correct answer is A. The employees' net pay is $56,160.Explanation:Gross earnings: $78,000Earnings subject to employment taxes: $27,000Federal unemployment tax rate: 0.8%State unemployment tax rate: 5.4%Federal income tax rate: 20%FICA tax rate: 8%Federal unemployment tax: $27,000 x 0.008 = $216State unemployment tax: $27,000 x 0.054 = $1,458Federal income tax: $78,000 x 0.20 = $15,600FICA tax: $78,000 x 0.08 = $6,240Total deductions: $216 + $1,458 + $15,600 + $6,240 = $23,514Net pay: $78,000 - $23,514 = $56,160

A Company Has 24 Employees Who Are Paid on a Monthly