Chapter 8-Adaptive Study Plan

Beach Bike Rental Company pays its four employees on a weekly basis and utilizes a payroll register, individual employee earnings record, and a general journal. Beach Bike Rental 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%.Tyler Rice, employee #3, has worked as a service technician for the past two years, with a hire date of August 1. He was born on November 11, 1994, and his Social Security number is 232-90-4554. Tyler's address is 15 Fern Drive, Makefield, GA 31343. Tyler is single and claims two (2) allowances.For the week ended August 15, 20--, Tyler worked 42 hours. His regular hourly rate is $14.00. Tyler's federal income tax withholding is $41 for the week. Total earnings for Jan. 1-Aug. 15 are $17,900.00.When completing an employee earnings record for Tyler, what are the total earnings, taxable earnings, total deductions, and total check amount, respectively?

$602.00; $602.00; $87.05; $514.95

During the first week of March, Ryan Owens earned $800. Assume a Social Security tax rate of 6.2%; a Medicare rate of 1.45%; and that federal and state income tax withholdings are $65 and $24, respectively. Assume that Ryan has voluntary withholdings of $40 for savings. What amount did Ryan receive in his check, net of all deductions, for the week's pay?

$609.80

Ina Vansant worked 47 hours during the past week. She is entitled to 1½ times her regular pay for all hours worked in excess of 40 during the week. Her regular hourly rate of pay is $15.00. Social Security tax is withheld at the rate of 6.2%, Medicare tax is withheld at the rate of 1.45%, federal income tax withheld is $59.00, and $5.00 of union dues are withheld. What is Ina's net pay for the week?

$635.55 (40 hours × $15.00 = $600.00 regular pay; $15.00 × 1.5 OT rate= $22.50 OT hourly rate; 7 hours OT × $22.50 = $157.50 OT pay. $600.00 regular + $157.50 OT = $757.50 gross pay. $757.50 × 6.2% = $46.97 Social Security deduction; $757.50 × 1.45% = $10.98 Medicare deduction. $757.50 - $46.97 - $10.98 - $59.00 - $5.00 = $635.55 net pay.)

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 (Trish's total earnings: $22.00/hr. × 40 hours = $880.00 regular pay + ($22.00 × 1.5 = $33.00/hr. OT rate) × 1 hour = $33.00 overtime pay. $880.00 + $33.00 = $913.00 total earnings for week ending March 7. Taxable earnings are the same as her total earnings, $913.00. Total Deductions = $56.00 + ($913.00 × 7.65% FICA = $69.84) = $125.84. $913.00 - $125.84 = $787.16 total check amount.)

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 September 14, the following data were reported on the payroll register of Hair by Michael: Regular earnings $17,400.00 Deductions: Federal income tax $1,990.00 Social Security tax $1,078.80 Medicare tax $252.30 Health insurance premiums $370.00 Which of the following is the appropriate payroll journal entry for Hair by Michael on September 14?

Debit Wages and Salaries Expense for $17,400.00 and credit Employee Income Tax Payable for $1,990.00, Social Security Tax Payable for $1,078.80, Medicare Tax Payable for $252.30, Health Insurance Premiums Payable for $370.00, and Cash for $13,708.90.

For the week ending February 28, the payroll register for Wallingford Legal Services Group reported the following data: Wages and salaries expense $33,000 Employee income tax payable $4,850 Health insurance premiums $620 Earnings subject to Social Security taxes $33,000 Calculate the amount of Social Security and Medicare taxes to be withheld. Determine the amount that will be credited to Cash for the net pay amount. What is the appropriate journal entry for the February 28 payroll, crediting Cash for net pay?

Debit Wages and Salaries Expense for $33,000.00 and credit Employee Income Tax Payable for $4,850.00, Social Security Tax Payable for $2,406.00, Medicare Tax Payable for $478.50, Health Insurance Premiums Payable for $620.00, and Cash for $25,005.50. (Debit Wages and Salaries Expense for the entire payroll amount of $33,000.00. Credit Employee Income Tax Payable for $4,850.00 + Social Security Tax Payable for $2,046.00 ($33,000 × 6.2%) + Medicare Tax Payable for $478.50 ($33,000 × 1.45%) + Health Insurance Premiums Payable for $620.00 + Cash for $25,005.50.)

On June 15, the following data were reported on the payroll register of Bella Day Spa: Regular earnings$5,830.00Overtime earnings590.00Deductions:Federal income tax680.00Social Security tax398.04Medicare tax93.09Health insurance premiums180.00United Way contributions40.00 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.

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

Which of the following statements regarding employee payroll tax deductions is not true?

Employee tax deductions are expenses to the employer.

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.

Employee Federal Income Tax Payable, Social Security Tax Payable, and Medicare Tax Payable are all classified as what type of accounts?

Liabilities

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

Medicare tax.

When journalizing the payroll, the amount of cash credited is equal to which of the following?

Net pay

Which of the following two payroll recording devices are linked?

Payroll register and employee earnings record

Which of the following is a type of compensation that is expressed in biweekly, monthly, or annual terms?

Salary

Which of the following taxes is paid by both the employee and the employer?

Social Security tax

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

Wages and Salaries Expense

All of the following are major categories of deductions from gross pay except

garnishments.

Employers are required by the Fair Labor Standards Act to pay overtime at 1½ times their regular hourly rate to any hourly employee who works

over 40 hours in a week.

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

payroll processing center