(L.O. 1) An employee's net pay is determined by gross earnings minus amounts for income tax withholdings,
Approach and Explanation: Before you read the answer selections, write down the model for the net pay (take-home pay) computation. Then find the answer selection that agrees with your model.
Employee's gross earnings for the current period
- Federal income tax withholdings
- FICA tax withholdings
- Withholdings for voluntary deductions such as for charitable contributions, group health and life
= Net (or take-home) pay
(Solution = d.)
(L.O. 2) Which group of items would be recorded in the Payroll Tax Expense account?