Multiple Choice
Which of the following is the first step toward recognizing product sales in financial accounting?
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4. Merchandising Operations
Net Sales
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An employee earns a monthly gross salary of \$4,000. His employer deducts \$300 for taxes and \$200 for insurance each month. What will be his new monthly net pay? Round your answer to the nearest dollar.
A
\$4,000
B
\$3,700
C
\$3,800
D
\$3,500
Verified step by step guidance1
Step 1: Begin by understanding the concept of net pay. Net pay is the amount an employee takes home after all deductions (such as taxes and insurance) are subtracted from the gross salary.
Step 2: Identify the gross salary of the employee, which is given as \$4,000 per month.
Step 3: Determine the total deductions. Add the tax deduction (\$300) and the insurance deduction (\$200) to calculate the total deductions: \$300 + \$200.
Step 4: Subtract the total deductions from the gross salary to calculate the net pay. Use the formula: Net Pay = Gross Salary - Total Deductions.
Step 5: Round the resulting net pay to the nearest dollar, as instructed in the problem.
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