Answer full question **Title: Understanding Employee W-2 Forms for Year 1 Reporting****Introduction:**In this guide, we will explore the process Old Town uses to report amounts on the Year 1 W-2 forms for each employee. The W-2 form is an essential document that reflects various income and tax data for employees. It is crucial to understand the breakdown of information provided in each box of the form.**Breakdown of W-2 Form Information:**For each employee, Clay and Philip, the W-2 form provides the following details:**Clay's W-2 Form:**- **Box 1:** Wages, tips, and other compensation- **Box 2:** Federal income tax withheld- **Box 3:** Social security wages- **Box 4:** Social security tax withheld- **Box 5:** Medicare wages and tips- **Box 6:** Medicare tax withheld**Philip's W-2 Form:**- **Box 1:** Wages, tips, and other compensation- **Box 2:** Federal income tax withheld- **Box 3:** Social security wages- **Box 4:** Social security tax withheld- **Box 5:** Medicare wages and tips- **Box 6:** Medicare tax withheld**Note:** Ensure no intermediate calculations are rounded during the preparation of this form to maintain accuracy.**Conclusion:**The W-2 form is a vital component of tax documentation for both employees and employers. Correctly reporting and understanding the amounts in each box ensures compliance and accuracy in tax filings. **Old Town Entertainment Employee Payroll Calculation**Old Town Entertainment employs two individuals in Year 1. Clay earns $4,800 per month, while Philip, the manager, earns $10,400 per month. Neither employee receives additional pay for overtime work. The tax rates that apply are as follows:- Social Security tax: 6% on the first $110,000 of earnings.- Medicare tax: 1.5% on all earnings.- Federal income tax withholding: 16% of gross earnings for Clay and 20% for Philip.Both employees have been employed throughout the year.### Required Calculationsa. **Calculate the net pay for both Clay and Philip for March.**b. **Calculate the net pay for both Clay and Philip for December.**c. **Determine if the net pay is the same in March and December for both employees.**d. **Calculate the amounts Old Town will report on the Year 1 W-2s for each employee.****Instructions:** Please complete this question by entering your answers in the tabs provided below.(Note: Do not round intermediate calculations when determining the answers.)

Net pay the pay which is left with the employee after paying all the taxes and contributions which…

Old Town Entertainment has two employees in Year 1. Clay earns $4,800 per month, and Philip, the manager, earns $10,400 per month. Neither is paid extra for working overtime. Assume the Social Security tax rate is 6 percent on the first $110,000 of earnings and the Medicare tax rate is 1.5 percent on all earnings. The federal income tax withholding is 16 percent of gross earnings for Clay and 20 percent for Pilip. Both Clay and Philip have been employed all year. Required a. Calculate the net pay for both Clay and Philip for March. b. Calculate the net pay for both Clay and Philip for December. c. Is the net pay the same in March and December for both employees? d. What amounts will Old Town report on the Year 1 W-2s for each employee?