Problem 169 - 1,001 GED Practice Questions For Dummies

Question

Tom’s gross weekly salary is \(840. His salary is taxed at 17%. What is Tom’s net salary? Round your answer to the nearest cent. (A) \)142.80 (B) \(672,90 (C) \)697.20 (D) $982.80

Step-by-Step Solution

Answer

\(697.20\)

Step 1: Calculation of Tax Amount

Since Tom's salary is taxed at a rate of 17%, the tax amount can be found by taking 17% of his gross salary of $840. That can be mathematically expressed as: \( \text{Tax Amount} = \frac{17}{100} \times 840 \)

Step 2: Perform the Calculation

Now substitute the values and do the multiplication: \( \text{Tax Amount} = \frac{17}{100} \times 840 = 142.80 \) So, the tax amount is $142.80.

Step 3: Calculation of Net Salary

Now, to calculate the net salary, subtract the tax amount from Tom's gross salary. The net salary can be mathematically represented as: \( \text{Net Salary} = \text{Gross Salary} - \text{Tax Amount} \)

Step 4: Perform the Calculation

Substitute the values into the above equation and carry out the subtraction: \( \text{Net Salary} = 840 - 142.80 = 697.20 \) So, rounded to the nearest cent, Tom's net salary is \(697.20. Therefore, the correct answer among the options provided would be (C) \)697.20.

Key Concepts

Percentage Calculation

Calculating percentages is a fundamental math skill that helps in understanding proportions relative to a whole. A percentage represents a fraction of 100. This concept is widely used in various aspects of life, such as calculating discounts, determining interest rates, and more.

To calculate a percentage, you multiply the number by the percentage (in decimal form). The formula is:

• Percentage Value = (Percentage Rate / 100) × Total Value

For example, in Tom's salary case, we find 17% of his gross salary, which is $840:

• Tax Amount = \( \frac{17}{100} \times 840 = 142.80 \)

This calculation tells us how much of his salary is deducted as tax each week.

Net Salary Calculation

Net salary is the amount an employee takes home after all deductions like taxes and other withholdings. It is also known as take-home pay.

To find the net salary, you need to subtract the total deductions from the gross salary. Here is the formula:

• Net Salary = Gross Salary - Total Deductions

Understanding net salary is crucial for budgeting and financial planning as it reflects the actual income received.

In the given exercise, after finding out the tax amount of $142.80, Tom's net salary would be:

• Net Salary = \(840 - 142.80 = 697.20\)

This calculation indicates what Tom actually receives after taxes.

Tax Deduction

A tax deduction reduces the amount of income that is subject to taxation, which in turn decreases the total tax liability. It is essential to know how these deductions affect your gross income because they determine the net salary.

Taxes are usually a fixed percentage of your gross income, also known as the tax rate. Different types of taxes can be deducted from a salary, including federal, state, and other specific taxes like social security in some countries.

For Tom, the income tax deduction is 17% of his gross salary:

• Tax Amount = \( \frac{17}{100} \times 840 = 142.80 \)

After applying the tax deduction, what remains is the net salary, which is what you actually pay in your personal expenses.