Small Business Accounting Chapter 11 Smartbook

Jane Smith earns $975 a week. As of the end of February, Jane has cumulative earnings $7,800. During the last week of February, how much of her current earnings are subject to state unemployment tax?

$175

An employee is filing the first quarter Employer's Quarterly Federal Tax Return, Form 941. The deadline to file is

April 30

What account is credited for the payment of Federal Unemployment Taxes?

Cash

Accumulated tax deposit < threshold Lookback period < $50,000 Lookback period > $50,000 Accumulated tax liability > $100,000

Employer may pay the amount due with the payroll tax return Employer must make monthly payments Employer must make semiweekly deposits Deposit is due next banking day

A preprinted government form used by the employer to report payroll tax information relating to social security, Medicare, and employee income tax withholding to the Internal Revenue Service is called the ___________________.

Employer's Quarterly Federal Tax Return, Form 941

Federal Unemployment Tax, Form 940, is a preprinted form used to report

FUTA

What account is debited for the payment of Federal Unemployment Taxes?

Federal Unemployment Tax Payable

The form submitted to the Internal Revenue Service to report Federal Unemployment Taxes is called the

Federal Unemployment Tax, Form 940

Employers are responsible for matching payments of _____ and _______ tax expenses

Medicare, social security

How often are the Federal Unemployment taxes deposited?

Quarterly

A form that is submitted to the Social Security Administration and reports the total social security wages and withholdings, the total Medicare wages and withholdings, the total federal income tax withholdings, and the total wages, tips, and other compensation is called the

Transmittal of Wage and Tax Statements, Form W-3

True or false: Employers make tax deposits for employer and employee Medicare taxes, employer and employee social security taxes, and the federal income tax withheld from employee earnings.

True

True or false: Employers pay the same amount of social security and Medicare taxes as the employee pays

True

True or false: Most companies are required to file and pay federal tax deposits electronically; however, some companies may use a tax deposit form and pay by check

True

A good internal control is to make changes to employee withholding allowances based only on a Form _____ properly completed and signed by the employee.

W-4 (W4 is marked as wrong)

A preprinted government form that contains each employee's earnings and tax withholdings for the year is called the

Wage and Tax Statement, Form W-2

Employers provide a statement to each employee by January 31 for the previous calendar year's earnings; this form is called a ____________.

Wage and Tax Statement, W-2

Based on employee earnings for the previous year, Grace Bookkeeping Company paid an estimated premium of $500 for workers' compensation insurance in advance for the new year. The journal entry to record this transaction would require which of the following entries

a credit to cash a debit to prepaid workers' compensation insurance

A company's payroll register showed total employee earnings of $1,000 for the payroll period ended August 31. The employer's share of the social security tax is $62, and Medicare tax is $14.50. The general journal entry to record the employer's payroll taxes for the period will include which of the following entries

a credit to social security tax payable a credit to Medicare tax payable a debit to payroll taxes expense

An employer's accounting records show $300 of Federal unemployment tax and $750 of State unemployment tax. The entry to record the employer's unemployment taxes will include which of the following entries

a debit to Payroll Taxes Expense a credit to Federal Unemployment Tax Payable a credit to State Unemployment Tax Payable

A company's accounting records show total social security withholdings of $124, total Medicare withholdings of $29.00, and federal income tax withholdings of $147.00. The entry to record the tax deposit will include which of the following entries

a debit to social security taxes payable for $124, Medicare tax payable for $29, and employee income tax payable for $147 a credit to cash for $300

Employers with many employees make large deposits for worker's compensation insurance at the beginning of the year. From January through November, they pay the _____ premium due based on an audit of the month's wages

actual

Employers with many employees make large deposits for worker's compensation insurance at the beginning of the year. From January through November, they pay the _____ premium due based on an audit of the month's wages.

actual

Employer payroll tax deposits can be made

by electronic deposit by check deposited in an authorized financial institution

A company submits the Employer's Quarterly Report along with payment to the state authority for the unemployment of $800. The entry to record this transaction will include

credit to cash debit to state unemployment tax payable

Based on employee earnings for the previous year, Gonzo Bookkeeping Company paid an estimated premium of $500 in advance for the new year. At the end of the year, the actual premium was computed for $600. The year-end adjustment for $100 would include which of the following entries

credit to workers' compensation insurance payable debit to workers' compensation insurance expense

A company's payroll register showed total employee earnings of $500 for the payroll period ended June 30. The employer's share of the social security tax is $31.00 and Medicare tax is $7.25. The general journal entry to record the employer's payroll taxes for the period will include a (debit/credit) ______ to the payroll tax expense account in the amount of $_______.

debit, $38.25

The Wage and Tax Statement, Form W-2 is a preprinted government form that contains information about

each employee's earnings and tax withholdings for the year

Employers make payroll tax deposits to a Federal Reserve Bank (or authorized financial institution) for

employee federal income tax withholdings employee social security taxes employer Medicare taxes

The Employer's Quarterly Federal Tax Return, Form 941, reports which of the following items

employee federal income tax withholdings social security withholdings Medicare withholdings

A company's accounting records show total social security withholdings of $62, total Medicare withholdings of $14.50, and federal income tax withholdings of $123.50. The entry to record the tax deposit will include a debit to which account

employee income taxes payable in the amount of $123.50

The Unemployment Insurance program is a program that provides unemployment compensation through a tax paid by ___ in most states

employers

The Unemployment Insurance program is a program that provides unemployment compensation through a tax paid by ___ in most states.

employers

Businesses that provide steady employment may qualify for a reduction in unemployment taxes based on

experience rating system

The lookback period is a _________ of the preceding year.

four-quarter period ending on June 30

The deadline to file the Employer's Quarterly Federal Tax Return, Form 941 is

last day of the month following the end of each calendar quarter

The four-quarter period ending on June 30 of the previous year and used to determine the payroll taxes deposit schedule is called the _____ period

lookback

Federal tax deposit have various due dates, depending on the amount. Identify which of the following schedules are used

next banking day payments monthly payments semiweekly payments

An employer's accounting records show $20 of Federal unemployment tax and $60 of State unemployment tax. The entry to record the employer's unemployment taxes will include a debit to

payroll tax expense

The Employer's Quarterly Federal Tax Return, Form 941 is a preprinted government form used by the employer to report

payroll tax information relating to social security, Medicare, and employee income tax withholding to the Internal Revenue Service

Based on employee earnings for the previous year, Jordon Delivery Company paid an estimated premium of $800 for worker's compensation insurance in advance for the new year. The journal entry to record this transaction would require a debit to the _____ account for $800.

prepaid workers' compensation insurance

Federal Unemployment taxes are generally deposited in what time period

quarterly

Employers are responsible for matching payments of _______ and _______ tax expenses.

social security Medicare

The experience rating system, also known as a merit rating system, may reduce the amount of ____________.

state unemployment tax

A company submits the Employer's Quarterly Report along with payment to the state authority for the unemployment of $1,100. The entry to record this transaction will include a debit to

state unemployment tax payable

The Transmittal of Wage and Tax Statements, Form W-3 is due to the Social Security Administration on:

the last day of February

A Wage and Tax Statement, also known as Form W-2, is provided

to employees and reports employee's earnings and withholdings for the year

Line 5a of Form 941 shows

total amount of wages subject to social security taxes

The Transmittal of Wage and Tax Statements, Form W-3, is submitted to the Social Security Administration and reports the total _____________.

total wages, tips, and other compensation total Medicare tax withheld social security tax withheld

A program that provides unemployment compensation through a tax levied on employers is known as the _______ program

unemployment insurance

A program that provides unemployment compensation through a tax levied on employers is known as the _______ program.

unemployment insurance

Identify which of the following are recommended internal control procedures to protect payroll operations

use Prenumbered forms for the payroll checks have the monthly payroll bank account statement received and reconciled by someone other than the person who prepares the payroll checks keep payroll records in a secured location

Based on employee earnings for the previous year, Excellent Lighting Company paid an estimated premium of $900 for worker's compensation insurance in advance for the new year. The actual premium at the end of the year was $1,000. The year-end adjusting journal entry to record the additional amount would require a debit to the _____ account for $100.

workers' compensation insurance expense

An employer with many employees must pay a deposit at the beginning of the year usually equal to _____% of the estimated annual premium for worker's compensation insurance.

25

State unemployment tax is generally paid on the first $____ of annual earnings for each employee.

7,000