The monthly salaries for December and the year-to-date earnings of the employees of Bush 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 $122,700 for the calendar year. (Round your final answers to 2 decimal places.)

The social security tax rate for the employees is show below

Thus, for the employee 3 = 10709 + 117799 = 128, 508 which is above the base

Explanation:

Solution

Given that:

Employee:                             1              2           3               4

December Salary :            $9900    $10,000  $10709   $10,000

Year of date earnings

Through November 30:   $99,000  $70,000 $117799 $100000

Social sec taxable

Earnings  December:        9900     10,000   4901           10,000

Social security tax 6.2%:  613.80    620        304            620

Now,

For the employee 3 = 10709 + 117799 = 128, 508 which is above the base

Thus,

$128,508 - $122, 700

=5808 ( this earning is not taxable)

Hence, 10709 -5808 = 4901 (this is a taxable earning).

a.   is the correct choice.

good luck. : )