Accounting Chapter 7

"A few states, under their State Unemployment Tax Act, charge their employers a percentage on the first $____ an employee earns."

$7000

"The _____ Act provides for retirement pensions after a worker reaches age 62, disability benefits for any worker who becomes disabled, and a health insurance program after age 65."

Federal Insurance Contributions Act

What two taxes does the employee pay?

Federal income tax FICA

"Reports for FUTA tax must be submitted annually on Form __."

Form 940

"Every three months, the employer must submit reports to the U.S. Treasury, using Form ___."

Form 941.

"Businesses are required to give an independent contractor an IRS form 1099-MISC for the year if the fees paid are ___ or more."

$600.00

"The current FUTA tax rate is ___ percent."

0.6% (0.006)

What three things are business enterprises required by law to do?

1. Withhold certain amounts from employee pay 2. Make payments to government agencies by specific deadlines 3. Submit reports on official forms.

"Employees contribute ___ percent on all earnings in a calendar year, with no earnings limit for Medicare."

1.45%

What percentage does the employer pay for Medicare?

1.45%

John Joesph, a strawberry picker, is paid $3 for each box of strawberries picked. If he picks 24 boxes during the day, what are his total earnings?

24 x 3= $72

"As of the textbook, employees contribute ____ percent on the first $106,800 earned in a calendar year for Social Security."

4.2%

Mark Anderson's regular rate of pay is $22.95 per hour. He receives time and a half for hours worked in excess of 40 hours. The company pays him double time for any hours worked on Sundays. Calculate total wages paid: 40 hours straight time 6 Hours overtime (None on Sunday)

40 x $22.94 per hour = $918.00 6 x $34.43 per hour= $206.58 ($22.95 x 1.5= $34.43 per hour) Total: $1124.58

What percentage does the employer get taxed for SUTA on the first $7,000?

5.4%

"As of the writing of the textbook, the employer pays ____ percent on the first $106,800 earned by the employee for Social Security."

6.2%

"The ______ Act is referred to as "the Act" or "FLSA."

Fair Labor Standards Act

"To comply with government regulations, a firm has to keep current data on each employee's what? (3 things)"

Accumulated earnings Deductions Net pay

"The employer must submit the W-2 form to the employee on a ____ basis."

Annual

"A company may supplement an employee's salary or wages with ___."

Benefits

"The federal unemployment tax is based on the total earnings of each employee during the ____ year."

Calendar

"The FUTA tax is generally imposed on all employers except what two entities?"

Charities and nonprofit schools

Lora Brown receives an annual salary of $44,000. Her employer agrees to pay her a 5 percent commission on all sales during the year in excess of $200,000. Her sales for the year total $445,000. How much is her commission? Total earnings?

Commission: ($445,000-$200,000) x 0.05= $12,000 Total earnings: ($44,000 + $12,250) =$56,250

"The ____ Act requires employers not only to withhold the tax and pay it to the U.S. Treasury but also to keep records of the names and addresses of the persons employed, their earnings, with-holdings, and the amounts and dates of payment."

Current Tax Payment Act

What two things can make the premium rates for the workers compensations law vary?

Degree of danger inherent in each job The employer's number of accidents

"An ____ is one who is under the direction and control of the employer."

Employee

"Each employee has to fill out an ______."

Employee's Withholding Allowance Certificate (Form W-4)

"The _____ ordinarily pays the cost of the insurance premiums for workers compensation laws."

Employer

"The FUTA tax is paid by ____ only."

Employers

"The State Unemployment Tax is paid by ____ only."

Employers

What does biweekly mean?

Every two weeks

"An ____ is an amount of an employee's annual earnings not subject to income tax."

Exemption

What four taxes does the employer pay?

FICA FUTA SUTA Workers compensation

"In the journal, the total Social Security tax deductions and the total Medicare Tax deductions are combined to become _____. (Account)"

FICA taxes payable

"Included in the _____ Act are provisions related to child labor and equal pay for equal work."

Fair Labor Standards Act

"An _____ is engaged for a definite job or service and may choose his or her own means of doing the work."

Independent contractor

"The information contained in the payroll register is recorded each payday in each employee's _____."

Individual earnings record

What are the two steps for using the wage-bracket tax tables?

Locate the wage bracket Find the column for the number of allowances claims and read down until you get to the appropriate wage-bracket line

How often is the SUTA tax required to be reported by employers?

On a quarterly basis

"A firm with a large number of employees would probably open a special ____ account."

Payroll bank account

"The ___ is a manual or computerized schedule prepared for each payroll period listing the earnings, deductions, and net pay for each employee."

Payroll register

"The ___ summarizes the payroll data for the period."

Payroll register

What four records of information are employees required to keep?

Personal data on employees Data on wage payments Amount of taxable wages paid Amount of tax withheld from each employee's earnings by period

"Wages may also be paid on a _____ basis."

Piecework

"_____ contains the rules for depositing federal income, Social Security, and Medicare taxes, and contains the withholding tables for these taxes."

Publication 15

"The employer must submit Form 941 to the Internal Revenue Service on a ____ basis."

Quarterly

"Money paid to a person for managerial or administrative services is usually called a ____."

Salary

What the accounts would be included for a payroll entry in the journal?

Sales Wages Expense (Dr) Employees' Federal Income Tax Payable (Cr) FICA Taxes Payable Employees' State Income Tax Payable Employees' United Way Payable (Only if there are charity donations) Accounts Receivable Wages Payable Wages Payable (Dr) Cash-M. Anderson (Cr) Cash-A. Bodell

"The _____ Act began as an attempt to provide retired workers with benefits based on their work history."

Social Security Act

"Currently, FICA taxes consist of what two taxes?"

Social Security and Medicare

What is net pay?

Take-home pay. (The result of deductions taken out of gross pay.)

What are taxable earnings?

The earnings subject to tax

"What three things does the employer's payment to the IRS consist of?

The employee's share of FICA taxes The employer's matching portion of the FICA taxes The employee's income tax withheld

What is gross pay?

The total amount of an employee's pay before deductions.

What does semimonthly mean?

Twice a month

"The _____ cover monthly, semimonthly, biweekly, weekly, and daily payroll periods."

Wage-bracket tax tables

"Money paid for skilled or unskilled labor is usually called _____."

Wages

What does a payroll entry for a payroll bank account look like?

Wages Payable (Dr) Cash- Payroll bank account (Cr)

What four time-frames can employees be paid in?

Weekly Biweekly Semimonthly Monthly

"A _____ is used by employers to calculate the amount of income tax withheld from an employee's paycheck."

Withholding allowance

"____ laws protect employees and their dependents against losses due to death or injury incurred on the job."

Workers' compensation laws