Calculating Net Pay for Employees: A Comprehensive Guide

School: New Brunswick Community College, Fredericton - Course: ACCT FINANCIAL - Subject: Accounting

Calculate Net Pay Step 1 - Calculate CPP Kit makes$ 1,000 bi-weeklycalculate the amount of CPP to be withheld from his pay Gross Pay (Expense)1,000 CPP Exemption3,500/26 pays = 134.61 Pensionable Earnings865.39 CPP Rate5.70% CPP Contributions49.33 Kat makes$ 800 weeklycalculate the amount of CPP to be withheld from his pay Gross Pay800 CPP Exemption3500/52 pays = 67.30 Pensionable Earnings732.70 CPP Rate5.7% CPP Contributions41.76 Step 2 - Calculate EI Kit makes$ 1,000calculate the amount of EI to be withheld from his pay Gross Pay (Insurable Earnings)1,000 EI Rate1.58% EI Premiums15.80 Kat makes$ 800calculate the amount of EI to be withheld from his pay Gross Pay (Insurable Earnings)800 EI Rate1.58% EI Premiums12.64
Calculate Net Pay Step 3 - Calculate Income Tax Kit makes$ 1,000calculate the amount of Income Tax to be withheld from his pay if the tax rate is 25%. Gross Pay1,000 Income Tax Rate25% Income Tax to be withheld250 Kat makes$ 800calculate the amount of Income Tax to be withheld from his pay if the tax rate is 30% Gross Pay800 Income Tax Rate30% Income Tax to be withheld240 Step 4 - Deduct anything else (Examples: Medical Insurance, Donations) Putting it all Together! Calculate Net Pay for Kit using the information above, and he alsodonated $20 to the United Way Gross Pay (Salary Expense)1,000 CPP Contributions49.33 EI Premiums15.80 Income Tax250.00 United Way20.00 Net Pay (Salary Payable)$664.87

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