Sample ProblemChapter 10

Determining social security withholding. The monthly salaries for December and the year-to-date earnings of the employees of Carter Consulting Company as of November 30 follow.                                                                                                                                                                                                                                                       

Determine the amount of social security tax to be withheld from each employee’s gross pay for December. Assume a 6.2 percent social security tax rate and an earnings base of $90,000 for the calendar year.

Determining social security withholding

Employee December salary YTD earnings through 11/30

#1 $9,200 $87,900

(90,000 – 87,900 = 2,100 2,100 x 6.2% = 130.20)

Determining social security withholding

Employee December salary YTD earnings through 11/30

#2 $8,750 $83,450(90,000 – 83,450 = 6,550 6,550 x 6.2% = 406.10)

Determining social security withholding

Employee December salary YTD earnings through 11/30

#3 $8,975 $90,100

0

Determining social security withholding

Employee December salary YTD earnings through 11/30

#4 $6,650 $67,500(6,650 x 6.2% = 412.30)