Practice Final: Payroll, Sales, and Property Taxes
The cash value of ________ must be included as compensation on the employee's W-2.
gift cards
Upon termination from a firm, the employer must disburse the former employee's final pay ________.
in accordance with state law
The percentage of the Medicare tax withholding ________.
is the same for every employee, earning less than $200,000
The percentage method of determining an employee's Federal income tax deductions ________.
is used primarily for high wage earners and computerized payroll programs
Verification of hours worked and pay accuracy is part of the ________.
payroll review process
Post-Tax Deductions are amounts ________.
that Include both mandatory and voluntary deductions
Al works in the warehouse for his company and receives $12.75/hour. He occasionally works in the Quality Assurance (QA) department as a receiving clerk and earns a 15% differential for hours worked there. During a two-week pay period, he worked 72 hours in the warehouse and 12 hours in the QA department. He worked all overtime hours in the warehouse. Standard workweek has 40 hours. What is his gross pay for the pay period? (Do not round intermediate calculations. Round final answer to 2 decimal places.)
$1,119.45 ($12.75 x 68 = $867, $19.13 x 4 = $76.50, $14.66 x 12 = $ 175.95, add up all = $1,119.45) *Since standard workweek is 40 hrs, and this is a two-week pay period, it becomes a total of 80 hrs, that's why there's only 4 hrs overtime.
Maile is a full-time exempt employee in Boca Raton, Florida, who earns $1,391.15 per biweekly payday. She is married with seven dependents, so her federal income tax is $0. She contributes 4% of her gross pay to her 401(k) and has her health insurance premium of $32 deducted on a pre-tax basis. She has $6 deducted per pay period for a Salvation Army contribution and has union dues of $14 per pay period. What is her net pay? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
$1,179.53 ($1,391.15 - $32 (insurance)= $1,359.15 - $55.65 (401k) = $1,303.50 - $84.27 (Social Security tax: 1,359.15 x 6.2%) - $19.71 (Medicare W/H: 1,359.15 x 1.45%) - $14 (Union Dues) - $6 (Salvation Army) = $1,179.53)
Daigneault Designs has the following amounts listed on their Form 941 (Assume no Section 125 health insurance and that none of the employees had exceeded the Social Security wage base.): 2. Wages, tips, and other compensation: 89,248.00 3. Federal income tax withheld from wages, tips, and other compensation: 7,774 What amounts belong in Column 2, Lines 5a and 5c?
$11,066.75 and $2,588.19, respectively (5a: 89,248 x .124, 5c: 89,248 x .029)
Max earned $1,260.55 during the most recent semimonthly pay period. He is single and has indicated checkbox withholding has no pre-tax deductions, and has filed a 2020 Form W-4. Using the following table, how much should be withheld for federal income tax? (Use the wage-bracket table, 2020 Wage Bracket Method Tables for Manual Payroll Systems With Forms W-4 From 2020 or Later: SEMIMONTHLY Payroll Period)
$133 (Under the Form W-4, Step 2, Checkbox withholding column not Standard Withholding)
McBean Farms has the following information on their Form 941: 2. Wages, tips, and other compensation: 142,328.00 3. Federal Income tax withheld from wages, tips, and other compensations: 16,496.00 What amount should be entered in Column 1, Lines 5a and 5c? (Assume no Section 125 health insurance and that none of the employees had exceeded the Social Security wage base.)
$142,328.00
Humberto is a salaried, nonexempt worker who earns $37,250 per year and has a standard 45-hour workweek. What is his hourly rate? (Round to the nearest cent.)
$15.92 per hour ($37,250/52 = $716.35, $716.35/45 = $15.92)
Sahar earns a salary of $31,500 per year as a nonexempt employee with a 35-hour standard workweek. What is her hourly rate? (Round to the nearest cent.)
$17.31 per hour ($31,500/52 = $605.77, $605.77/35 = $17.31)
Thaddeus is a salaried exempt worker who earns $60,000 per year for a 45-hour workweek. During a biweekly pay period, he worked 105 hours. What is his gross pay?
$2,307.69 ($60,000/26)
Jasmine is an employee with a period gross pay of $2,900.00. She elects to have 5.00% of her gross pay withheld for her 401(k) contribution and has no other pre-tax deductions. What will be her taxable income be for Federal income taxes?
$2,755.00 ($2,900 - $145)
Phillippe is an inside salesperson who earns a base annual salary of $34,200 plus a 5% commission on total sales that he makes during the pay period. During a semimonthly period, he made $28,000 in sales. What is Phillippe's gross pay for the period? (Do not round intermediate calculations. Round final answer to 2 decimal places.)
$2,825.00 ($34,200/24 = $1,425, $28,000 x 5% = $1,400, $1,425 + $1,400 = $2,825)
Publication ________ is the employer's guide to fringe benefits.
15-b
Which pay frequency has 26 or 27 pay periods per year?
Biweekly
Which Act extended medical benefits for certain terminated employees?
COBRA
Which of the following deductions may be taken on a pre-tax basis?
Cafeteria Plan, Health Insurance, Retirement Plan
What method(s) may be used to determine the fair market value of the personal use of a company car?
Cents-per-mile rule, Commuting rule, Replacement value rule
The ________ prohibited discrimination based on race, creed, color, gender, or national origin.
Civil Rights Act of 1964
What role does the employer play regarding an employee's federal withholding tax?
Collector and depositor
Which of the following is the correct sequence for computing net pay?
Compute gross pay, deduct pre-tax amounts, compute FICA, deduct taxes, and deduct post-tax amounts.
Which are steps in the net pay computation process?
Compute taxes to be withheld, Compute gross pay
________ benefits are fringe benefits with minimal monetary value.
De minimis
Which of the following must accompany a Health Savings Account (HSA) to be considered part of a cafeteria plan?
High-deductible health plan
Josh, who is 21 years of age, is a new employee of XYZ Company. To establish his identity and employment authorization, he could present:
His current United States passport.
What forms are required when an employee is hired?
I-9, W-4
The ________ mandated that employers verify an employee's legal ability to work in the United States.
Immigration Reform and Control Act of 1986
Mako was an employee of the Jaeger Corporation. After she voluntarily terminated employment, auditors discovered evidence of fraudulent activity that they traced to her. Mako's records must be retained:
Indefinitely
Individuals classified as ________ are processed as vendors of a firm.
Independent contractors
________ allows firms to allocate costs accurately among departments.
Labor distribution
The number of employees contained in the different departments of a company is known as the:
Labor distribution.
The ________ modified the statute of limitations imposed by the Equal Pay Act of 1963.
Lilly Ledbetter Fair Pay Act of 2009
The main purpose of the Federal Insurance Contributions Act (FICA) was to:
Provide benefits for workers who were unable to work because of age, disability, or death.
Outsourcing the payroll process:
Relieves the company of certain task completion but not the review process.
Employer contributions to employee health insurance must be:
Reported in Box 12, using Code DD.
Which form does the Internal Revenue Service use to keep track of employers?
SS-4
What is the difference in pay practices between salaried exempt and salaried nonexempt workers?
Salaried nonexempt workers are eligible for overtime pay.
Which of the following is always true about tipped employees?
They have the opportunity to earn tips from patrons as a regular part of their job.
Which of the following is subject to overtime in the process of hourly computations, according to FLSA?
Time worked in excess of 40 hours per week
Which most closely identifies why it is important for payroll accountants to adhere to the Code of Ethics?
To protect the assets of the company and remit money owed to the government
What is the purpose of pre-tax deductions?
To reduce the financial burden on families
Susan travels among client sites as a routine part of her employment. Travel to her first customer site and from the last customer site to her home are not compensated. Under which of the following circumstances will she be compensated for her travel? (Select all that apply.)
Travel between client sites and the firm's office, travel to alternative sites for the firm's meetings with multiple clients.
The form that employers use to report their quarterly Federal income tax liability is ________.
Form 941
Olga earned $1,588.00 during the most recent weekly pay period. She is single with 2 withholding allowances, per her 2019 Form W-4, and no pre-tax deductions. Using the percentage method, compute Olga's federal income tax for the period. (Do not round intermediate calculations. Round final answer to 2 decimal places.) Payroll Period One Withholding Allowance Weekly $83.00 Biweekly 165.00 Semimonthly 179.00 Monthly 358.00 Quarterly 1,075.00 Semiannually 2,150.00 Annually 4,300.00 Daily or miscellaneous (each day of the payroll period) 17.00
$215.78 ($1,588 - $166 ($83 x 2) = $1,422, Look at 2020 Percentage Method Tables for Manual Payroll Systems With Forms W-4 From 2019 or Earlier: WEEKLY Payroll Period: Single persons, At least $845 but less than $1,718, $1,422 - $845 (amount that the wage exceeds) = $577, $577 x 22% = $126.94, add tentative amount to withhold, $126.94 + $88.84 = $215.78)
Tony is a salaried, nonexempt employee who earns $39,400 for a standard 40-hour workweek. During a biweekly pay period, he worked 4.0 hours overtime. What is his overtime-hourly rate? (Round to the nearest cent.)
$28.41 per hour ($39,400/52 = $757.69, $757.69/40 = $18.94, $18.94 x 1.5 = $28.41)
Breon works as a clerk in the human resources department for her company for which she receives an hourly rate of $8.50. Occasionally she fills in for the receptionist at the front desk and receives a $1.50 per hour differential. During a weekly pay period, she worked 35 hours in the human resources department and 5 hours at the front desk. What is Breon's gross pay for the week?
$347.50 ($8.50 x 35 = $297.50, $8.50 + $1.50 = $10, $10 x 5 = $50, $297.50 + $50 = $347.50)
Adam is a part-time employee who earned $675.00 during the most recent pay period. He is married filing jointly with dependents per his 2020 Form W-4. Prior to this pay period, his year-to-date pay is $6,672.39. How much should be withheld from Adam's gross pay for Social Security tax?
$41.85 ($675 x 6.2%)
Jeannie is an adjunct faculty at a local college, where she earned $720.00 during the most recent semimonthly pay period. Her prior year-to-date pay is $18,650. She is single and has indicated a dependent on her 2020 Form W-2. What is her Social Security tax for the pay period?
$44.64 ($720 x 6.2%)
PCD Incorporated operates as a Nevada business. The SUTA wage base for Nevada is $32,500. PCD Inc.'s SUTA tax rate is 4.5%. The employees' annual earnings for the past calendar year are as follows: Annabelle $37,150, Beatrice $25,080, Michael $42,800, Howard $26,700. What is PCD Inc.'s SUTA tax liability for the year?
$5,255.10 ($32,500 x 4.5%, $32,500 x 4.5%, $25,080 x 4.5%, $26,700 x 4.5%, add all)
Paolo is a part-time security guard for a local facility. He earned $448.50 during the most recent weekly pay period and has earned $5,956.00 year-to-date. He is married filing jointly and claims dependents on his 2020 Form W-4. What is his Medicare tax liability for the pay period?
$6.50 ($448.50 x 1.45%)
On a recent paycheck, Mayim's taxes were as follows: Federal withholding, $49; Social Security tax, $52.94; Medicare, $12.30; and state income tax, $15.60. What is the employer's share for these taxes?
$65.24 ($52.94 + $12.30)
Johnny's Tavern had 16 employees and total annual wages of $386,948 during the previous year. All employees earned more than $7,000 during the year. What is Johnny's Tavern's FUTA tax liability?
$672.00 ($7,000 x .6%=$42x16=$672)
The minimum wage for salaried employees is:
$684/week.
Mac is a cook at a local restaurant and earns $9.15 per hour. He occasionally serves as the crew chief, for which he receives an additional $2.50 per hour. During a biweekly pay period, he had the following time data: Cook: 75 hours (including 8 hours overtime) Crew chief: 13 hours His gross pay for the pay period would be ________. (Do not round intermediate calculations. Round final answer to 2 decimal places.)
$874.30 ($9.15 x 67 = $613.05, $9.15 x 8 = $73.20 x 1.5 = $109.80, $11.65 x 13 = $151.45, $613.05 + $109.80 + $151.45 = $874.30)
Brandie is an hourly worker whose employer uses the quarter-hour method. During a one-week period, she worked the following hours: Day In Out In Out Mon. 8:03 12:00 1:03 5:04 Tues. 7:57 11:45 12:42 4:56 Wed. 8:08 12:15 1:20 5:03 Thurs. 8:02 12:28 1:25 4:58 Fri. 7:52 12:05 12:58 5:12 Using the quarter-hour method, how many hours did she work that week?
40.25 hours (40.16 hrs round up to quarter)
Which of the following is true about 401(k) retirement plans?
401(k) plans are usually subject to FICA taxes.
Quinn works the following hours during a one-week period: Day Hours Minutes Mon. 8 34 Tues. 7 56 Wed. 7 58 Thurs. 8 42 Fri. 8 2 Under the hundredth-hour method, how many hours has he worked?
41.20 hours
Worker's compensation insurance premiums:
Are governed by state laws and vary according to worker job classification.
Why is it important for an employer to classify a worker as either an employee or an independent contractor?
For tax reporting purposes
A firm needs to destroy paper payroll records after the end of the retention period. Which of the following is an option for destruction purposes?
Burning, shredding, and pulping.
Kohlmeier Industries had $87,950 of annual payroll taxes during the lookback period. The firm pays its employees biweekly on Wednesdays. Assuming that no payday has a tax liability in excess of $100,000, when are the payroll tax deposits due?
By Wednesday of the following week
Companies may use ________ and ________ to allow employees to have secure, rapid access to their compensation.
Direct Deposit; Paycards
Electronic tax deposits are usually processed through the:
EFTPS.
Employee file maintenance is the responsibility of the:
Employer
Employers must request a(n) ________ by using form ________ for the Internal Revenue Service to track a firm's payroll tax obligations.
Employer Identification Number; SS-4
Employment legislation during the 1930s included which of the following Acts:
FLSA, FUTA, and FICA
Dena's Decorations is a South Carolina business that has a SUTA rate of 3.60% and an annual SUTA wage base of $14,000. The employee earnings for the past calendar year are: B. Gilfilan $22,580, P. Laubach $38,090, S. Loftin $15,720, M. Moravec $10,040. (Assume that all employees have exceeded the annual FUTA wage base of $7,000 per employee and that the FUTA rate is 0.6%.) What are the FUTA and SUTA tax liabilities for Dena's Decorations?
FUTA $168; SUTA $1,873.44 (FUTA: 7,000 x 4 = 28,000 x .6% = $168, SUTA: 14,000 x 3.60% = 504 x 3 = 1,512 + 361.44 (10,040 x 3.60%) = $1,873.44)
Which of the following items is always the employer's sole responsibility?
FUTA taxes
The classification of workers as exempt and nonexempt pertains to the provisions of the:
Fair Labor Standards Act.
What differentiates Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs)?
Flexible Spending Accounts (FSAs) expire annually but Health Savings Accounts (HSAs) may be reserved for use late in life.
Lesch & Sons has been and is currently a monthly schedule depositor. During the current year, they experienced an economic downturn during which the firm had to lay off all but one employee. Their payroll taxes have decreased to less than $500 per month. Which form should they file to reconcile their taxes?
Form 941
The time period that the IRS uses to determine a firm's payroll tax deposit schedule is called the:
Lookback period.
The factors that determine an employee's federal income tax are ________.
Marital status, dependents, taxable pay, and pay frequency
Which of the following may be included as part of an employee's Section 125 "cafeteria" plan?
Medical expenses
Van Buren Enterprises had payroll tax liability of $42,450 during the lookback period. How frequently must the firm deposit its payroll taxes?
Monthly
Which pay frequency has 12 pay periods?
Monthly
Which of the following is true about the employee tax treatment of employer-provided snacks and meals?
Occasionally provided snacks and meals are not taxable.
Which of the following items must exist in every employee's payroll file?
Occupation
The Fair Labor Standards Act contains provisions for:
Overtime pay, minimum wage, and working conditions.
Paloma is a 16-year-old who babysits for a local family on an occasional basis. During a calendar year, she earned $1,250 in babysitting wages. What is true about Paloma's wages?
Paloma does not earn enough to be considered a domestic employee so FLSA rules do not apply.
Which of the following is true about document retention requirements per the IRS statute of limitations?
Payroll records must be maintained for three years after termination.
Nonexempt employees are usually workers who:
Perform operative level tasks.
Which of the following is used in the determination of the amount of federal income tax to be withheld from an employee per pay period?
Period salary, marital status
The primary difference between pre-tax and post-tax deductions is:
Pre-tax deductions reduce tax liability.
Which of the following is a payroll accountant's responsibility?
Preparation of payroll tax returns.
An accountant must remain current in his or her knowledge of current payroll practices, according to the ethical principle of ________.
Professional Competence and Due Care
Which of the following is among the guidelines for a Code of Ethics?
Professionalism
The purpose of payroll legislation is to:
Protect the rights of employees by legislating workplace equity.
Which pay frequency has 24 pay periods annually?
Semimonthly
Which of the following federal income tax withholdings scenarios will have the highest income tax?
Single, 1 dependent
The payroll tax(es) for which an employer must match the entire amount of the employee's deduction include ________.
Social Security and Medicare taxes. (up to $137,700 and $200,000 in annual compensation, respectively)
Cole is a minimum wage employee in Santa Fe, NM, where the minimum wage is $11.80 per hour. His employer claims that since the federal minimum wage is $7.25 per hour, Cole should only receive the federal amount. What is the correct answer in this situation?
The employer must pay the state-designated minimum wage for the area.
Vincent is a tipped employee who earns a wage of $2.13 per hour in a tip-credit state and works a standard 40-hour workweek. Last week, he earned $60 in tips. Which of the following is true?
Vincent's employer must pay him the tip credit because his wages and tips for the week were less than the federal minimum wage.
The total of a firm's annual wages and salaries must match on Forms ________.
W-3 and 941
The retention period for payroll documents commences:
When an employee terminates employment.
Under what condition is the fringe benefit of a gym membership taxable?
When the employer offers membership to an off-site club at no additional cost to the employee.
State and Local Income Tax rates ________.
differ among states and localities
