Acct. Ch. 8-9

Which of the following would be included in the journal entry to recognize the estimated expense related to workers' compensation insurance at the beginning of the year?

A debit to Workers' Compensation Insurance Expense

Hudson Transportation Service estimated that its total payroll for the coming year would be $375,000. Its workers' compensation insurance premium rate is 0.2%. Hudson paid an estimated workers' compensation insurance premium at the beginning of the year. However, Hudson's actual payroll for the year is $398,000. What amount of additional premium will Hudson pay at year-end, and what will the adjusting entry at year-end include?

$398,000 actual payroll - $375,000 estimated payroll = $23,000. $23,000 × 0.2% rate = $46 additional premium adjustment. The year-end adjusting entry would require a debit to Workers' Compensation Insurance Expense for $46 and a credit to Workers' Compensation Insurance Payable for $46.46; credit to Workers' Compensation Insurance Payable Answer: $46; credit to Workers' Compensation Insurance Payable

During the first week of January, Nora Taylor earned $800. FICA taxes are 7.65% of wages, SUTA is 5.4% of earnings to the maximum allowed, FUTA is 0.6% of earnings to the maximum allowed, and federal and state income tax withholdings are $72 and $24, respectively. Assuming that Nora is the only employee for the Ice is Nice Jewelry store, what is the total employer's tax expense for the first week of January?

$800 x 7.65% =49.60 $800 x 5.4% = 43.20 $800 x 0.6% = 4.80 $61.20 + $43.20 + $4.80 = 109.20 taxes Answer: 109.20

Which of the following is the main distinction between an employee and an independent contractor?

An employee works under the control and direction of an employer; an independent contractor does not work under the control and direction of the company paying for the service.

On June 15, the following data were reported on the payroll register of Bella Day Spa: Regular earnings. $5830 Overtime earnings. $590 Deductions: Federal income tax. $680.00 Social Security tax. $398.04 Medicare tax. $93.09 Health insurance premiums. $180.00 United Way contributions. $40 Which of the following is the appropriate payroll journal entry for Bella Day Spa's June 15 payroll?

Debit Wages and Salaries Expense for $6,420.00 and credit Employee Income Tax Payable for $680.00, Social Security Tax Payable for $398.04, Medicare Tax Payable for $93.09, Health Insurance Premiums Payable for $180.00, United Way Contributions for $40.00, and Cash for $5,028.87.

HomeNow Realtors estimated payroll for its administrative staff (noncommissioned) to be $415,000 for the year. HomeNow's workers' compensation insurance premium rate is 0.2%. What is the journal entry for the payment of the workers' compensation insurance premium at the beginning of the year?

Debit Workers' Compensation Insurance Expense for $830 and credit Cash for $830

Which of the following systems must be used to deposit employee federal income tax withheld, Social Security tax, and Medicare tax?

Electronic Federal Tax Payment System (EFTPS)

Which of the following is likely classified as a current liability for the employer?

Employee Income Tax Payable

Which of the following taxes does an Employer's Quarterly Federal Tax Return, Form 941, report for the quarter?

Employee federal income tax withheld and employee and employer Social Security and Medicare taxes withheld

When combined, the Social Security and Medicare taxes are known as the acronym

FICA

For the month of February, Lisa Steele earned $3,000. Lisa has been on the payroll since January 1 at a salary of $3,000 per month, which is paid at the end of the month. FICA taxes are 7.65% of wages, SUTA is 5.4% of earnings to the maximum allowed, FUTA is 0.6% of earnings to the maximum allowed, and federal and state income tax withholdings are $310 and $120, respectively. Lisa also has monthly health insurance premiums of $280 withheld from her earnings. Assuming that Lisa is the only employee for Dream Meals Catering, what is the total employer's tax expense for February?

FICA taxes $3,000 × 7.65% = $229.50 SUTA$3,000 × 5.4% = $162.00. FUTA $3,000 × 0.6% = $18.00 Employer's total payroll tax expense: $229.50 + $162.00 + $18.00 = $409.50. Answer: 409.50

Destiny Dating Co. owes the following amounts for payroll taxes and employees' withholding of Social Security, Medicare, and federal income tax as of April 15: Social Security tax payable $3,720 Medicare tax payable $870 FUTA tax payable $36 SUTA tax payable $3,240 Employee federal income tax payable $6,695 What are the journal entries for the deposits of the FUTA and SUTA taxes on April 30?

FUTA Tax Payable (Debit 36) Cash. (credit 36) Paid FUTA tax SUTA Tax Payable (Debit 3,240) Cash. (credit 3,240) Paid SUTA tax

For payroll purposes, what is the distinction between an employee and an independent contractor?

Government laws and regulations regarding payroll are much more complex for employees than for independent contractors.

The Oakdale School District employs Simon DuBois at a salary of $72,000 per year as a science teacher. Oakdale is levied employer payroll taxes at the following rates: Social Security taxes at 6.2%; Medicare taxes at 1.45%; SUTA tax at a rate of 5.4% and FUTA tax at a rate of 0.6% each on the first $7,000 of DuBois's salary. What is the total cost of employing Simon DuBois if there are no additional health care or pension expenses to Oakdale School District?

Gross wages $72,000 Employer Social Security tax, 6.2% of $72,000 = 4,464 Employer Medicare tax, 1.45% of $72,000= 1,044 SUTA, 5.4% of $7,000 =378 FUTA, 0.6% of $7,000= 42 Total $77,928 Answer: $77,928

To where are the employer's FICA taxes and the employee's Social Security and Medicare taxes withheld paid?

IRS - Internal Revenue Service

Which of the following does workers' compensation insurance provide?

Insurance for employees who suffer a work-related illness or injury

Employers must furnish every employee with a Wage and Tax Statement (Form W-2) by which of the following dates?

January 31

All of the following are examples of voluntary deductions from employee earnings except

Medicare Tax

Which of the following is the common account to which all employer payroll taxes are debited?

Payroll Taxes Expense

Which of the following is the form used by employers to gather data required at the end of each payroll period?

Payroll register

Which of the following two payroll recording devices are linked?

Payroll register and employee earnings record

What effect do the Social Security, Medicare, FUTA, and SUTA taxes imposed on the employer have on owner's equity?

Payroll taxes decrease owner's equity.

Why must self-employed individuals earning net self-employment income of $400 or more pay double the FICA rates?

Self-employed individuals can be viewed as both employer and employee.

Journalizing Payroll Transactions On December 31, the payroll register of Hamstreet Associates indicated the following information: Wages and Salaries Expense$9,400.00 Employee Federal Income Tax Payable $910.00 United Way Contributions Payable $150.00 Earnings subject to Social Security tax $8,600.00 Use Social Security 6.2% and Medicare 1.45% as specified in the text. 1. Determine the amount of Social Security and Medicare taxes to be withheld. If required, round your answers to the nearest cent.

Social Security Tax $533.20 Medicare Tax $136.30 1. Wages and Salaries Expense (Debit $9400) 2. Employee Federal Income Tax Payable (Credit $910) 3. Social Security Tax Payable (Credit $533.20) 4. Medicare Tax Payable (Credit $136.30) 5. United Way Contributions Payable (Credit $150) 6. Cash (Credit $7670.50 - subtract all the credits from the debit above to determine this amount.)

Destiny Dating Co. owes the following amounts for payroll taxes and employees' withholding of social security, medicare, and federal income tax as of March 15. Social Security tax payable $3720 Medicare Tax payable. $870 FUTA Tax Payable $36 SUTA tax payable $3240 Employee federal income tax payable $6695 What is the journal entry for the deposit of the employees' federal income taxes and the Social Security and Medicare taxes on March 15?

Social Security Tax Payable $3720 Medicare Tax Payable $870 Employee Federal Income Tax Payable $6695 Cash $11285 Deposit of employee federal income tax and social security and medicare taxes

Which of the following steps is not required to determine how much to pay an employee for a pay period?

Subtract deductions from total earning to compute net pay.

All of the following are employer payroll reporting forms

Summary of employee wages and taxes (Form W-3). Employment eligibility verification (Form I-9). Employee Wage and Tax Statement (Form W-2).

All of the following are commonly used by employers to accumulate individual employee payroll information.

The payroll register, federal withholding tax tables, the employee earnings record.

Which of the following forms is sent by employers, along with a Copy A of Forms W-2, to the Social Security Administration by January 31?

W-3

Which of the following accounts is debited for the gross pay of all employees?

Wages and Salaries Expense

When journalizing employer payroll taxes, Social Security, Medicare, FUTA, and SUTA taxes payable accounts are classified as which of the following types of accounts?

We usually credit separate liability accounts for Social Security, Medicare, FUTA, and SUTA taxes payable. Answer: Liabilities

Ryan Lawrence's regular hourly rate is $16. He receives 1½ times the regular rate for any hours worked over 40 a week and double the rate for work on Sunday. During the past week, Lawrence worked 8 hours each day Monday through Thursday, 10 hours on Friday, and 6 hours on Sunday. Compute Lawrence's gross pay for the past week.

Weekly gross Pay:40 hours × regular rate Plus(hours worked Mon. through Sat. - 40) × (hourly rate × 1.5) Plus(hours worked on Sunday) × (hourly rate × 2) Answer: 880

Which of the following is a common approach used by medium- and large-size businesses for payroll record keeping?

a payroll processing center

For better internal accounting control, payment by check or ____________ provides better internal accounting control than payment by cash.

direct deposit

Which of the following types of payroll system is based on a software package?

electronic system

Which of the following forms is known as a separate record of each employee's earnings for all pay periods?

employee earnings record

All of the following are commonly used by employers to accumulate individual employee payroll information, except

federal withholding tax tables

All of the following are important aspects of employer reporting and payment responsibilities for federal income tax withholding and Social Security and Medicare taxes

use of Form 941, Employer's Quarterly Federal Tax Return. use of electronic funds transfer to make federal tax deposits. determining when payments are due.

When all of the Social Security, Medicare, FUTA, and SUTA taxes payable accounts are paid to the IRS, which of the following balances should all of the accounts have?

zero balance

Question Content Area Blake's Cakes specializes in making custom cakes for weddings and events. It pays four employees on a weekly basis and utilizes a payroll register, an individual employee earnings record, and a general journal. Blake's Cakes uses a weekly federal income tax withholding table. Employees are paid 1½ times the regular rate for working over 40 hours per week. Social Security tax is withheld from the first $128,400 at 6.2%, and Medicare tax is withheld at the rate of 1.45%.Trish Johnson, employee #2, has worked as a cake designer and artistic director for Blake's Cakes for the past six years, with a hire date of October 10. Her date of birth is January 5, 1987, and her Social Security number is 166-23-1959. Trish's address is 1 Elmwood Drive, East Hanover, NJ 07065. Trish is married and claims three (3) allowances.For the week ended March 7, 20--, Trish worked 41 hours. Her regular hourly rate is $22.00. Trish's federal income tax withholding is $56.00 for the week.When completing an employee earnings record for Trish Johnson, what are the total earnings, taxable earnings, total deductions, and total check amount, respectively?

$913.00; $913.00; $125.84; $787.16

Determine pay rate when given month gross pay

(Monthly x 12)/52 weeks That amount divided by 40

FUTA Tax

0.6% or 0.006

Payroll Journal Entry Regular earnings$5,540.00 Overtime earnings $710.00 Deductions: Federal income tax $605.00 Social Security tax $387.50 Medicare tax $90.63 Pension plan $90.00 Health insurance premiums $260.00 United Way contributions $100.00 Journalize the above data taken from the payroll register of CopyMasters as of April 15, 20—.

1. Wages and Salaries Expense (Debit $6250) 2. Employee Federal Income Tax Payable (Credit $605) 3. Social Security Tax Payable (Credit $387.50) 4. Medicare Tax Payable (Credit $90.63) 5. Pension Plan Payable (Credit $90) 6. Health Insurance Premiums Payable (Credit $260) 7. United Way Contributions Payable (Credit $260) 8. Cash (Credit $4716.87 - subtract all the credits from the debit above to determine this amount.) 9. Payroll for week ended April 15

Medicare Tax

1.45% or 0.0145

SUTA Tax

5.4% or 0.054

What is the rate of Social Security tax an employer must pay on maximum earnings for each employee?

6.2%

Social Security Tax

6.2% or 0.062