Payroll Chapter 5-7

Collin's Pool Service files a Form 944 to report its payroll tax liability. Line 5 had a total of $2,648.96. Line 13m in Part 2 reported wages of $2,649.00. What needs to be done to reconcile the two amounts?

$0.04 needs to be added via line 6 for the current year's adjustments.

Maile is a full-time exempt employee in Boca Raton, Florida, who earns $1,370.15 per biweekly payday. She is married with seven withholding allowances, 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 $50 deducted on a pre-tax basis. She has $10 deducted per pay period for a Salvation Army contribution and has union dues of $40 per pay period. What is her net pay?

$1,114.35

Amity is an employee with a period gross pay of $2,000. She elects to have 3% of her gross pay withheld for her 401(k) contribution. What will be her taxable income be for federal income taxes?

$1,940

Caroljane earned $1,120 during the most recent pay biweekly pay period. She contributes 4% of her gross pay to her 401(k) plan. She is single and has 1 withholding allowance. Based on the following table, how much Federal income tax should be withheld from her pay?

$106.00

Tierney is a full-time nonexempt salaried employee who earns $990 per biweekly pay period. She is single with 1 withholding allowance and both lives and works in Maryland. Assuming that she had no overtime, what is the total of her Federal and state taxes for a pay period?

$113.80

Manju is a full-time exempt employee living in Illinois who earns $43,680 annually and is paid biweekly. She is married with three withholding allowances. What is the total of her Federal and state income tax deductions for the most recent pay period?

$161

Danny is a full-time exempt employee in Alabama, where the state income tax rate is 5%. He earns $78,650 annually and is paid semimonthly. He is married with four withholding allowances. His is health insurance is $100.00 per pay period and is deducted on a pre-tax basis. Danny contributes 5% of his pay to his 401(k). Assuming that he has no other deductions, what is Danny's net pay for the period?

$2,403.95 $2,361.72

Vivienne is a full-time exempt employee in DeKalb County, Indiana, and is paid biweekly. She earns $39,000 annually, and is married with 2 withholding allowances. Her state income tax deduction is $44.46, and the DeKalb County income tax deduction is $19.62. What is the total amount of her FICA, federal, state, and local taxes per pay period, assuming no Pre-Tax Deductions?

$272.83

Adam is a part-time employee who earned $495.00 during the most recent pay period. He is married with two withholding allowances. Prior to this pay period, his year-to-date pay is $6,492.39. How much should be withheld from Adam's gross pay for Social Security tax?

$30.69

Brent is a full-time exempt employee in Clark County, Indiana. He earns an annual salary of $45,000 and is paid semimonthly. He is married with 3 withholding allowances. His state income tax per pay period is $57.38, and Clark County income tax is $33.75 per pay period. What is the total of FICA, Federal, state, and local deductions per pay period, assuming no Pre-Tax Deductions?

$346.57

PCD Inc. operates as a Nevada business. The SUTA wage base for Nevada is $28,200. PCD Inc.'s SUTA tax rate is 4.5%. The employees' annual earnings for the past calendar year are as follows: Annabelle $36,750, Beatrice $24,880, Michael $42,200, Howard $26,500.

$4,850.10 $6,037.82 $4,733.72

Andie earned $680.20 during the most recent weekly pay period. She is single with 3 withholding allowances and needs to decide between contributing 2.5% and $25 to her 401(k) plan. If she chooses the method that results in the lowest taxable income, how much will be withheld for Federal income tax (based on the following table)?

$48.00

Scout Freeman is the Vice President for Marketing at Sun Field Industries. She earns $140,000 annually and is paid on a semimonthly basis. As of October 31, Scout has year-to-date earnings of $116,666.67. The Social Security wage base is $127,200.

$5,833.

Ramani earned $1,698.50 during the most recent biweekly pay period. He contributes $100 to his 401(k) plan. He is married and claims 3 withholding allowances. Based on the following table, how much Federal income tax should be withheld from his pay?

$83.00

Janna is a salaried nonexempt employee in Laramie, Wyoming, who earns $30,000 per year for a standard 40-hour workweek and is paid biweekly. She is single with one withholding allowance. During the last pay period, she worked 5 hours of overtime. She contributes 3% of her gross pay to her 401(k) on a pre-tax basis and has a garnishment of 10% of her disposable income for a consumer credit garnishment. What is her net pay?

$894.07

Why is it important to have columns on the payroll register title "Earnings subject to Federal Withholding" and "Earnings subject to FICA"?

(Both columns contain information about the employer's tax matching responsibilities.) It facilitates accuracy in employee payroll tax computations.

What is the primary purpose of a labor report?

(It depicts the ideal distribution of labor in a firm.) (It designates where labor is used in a firm.)

What is a disadvantage to using paycards as a method of transmitting employee compensation?

+ Potential withdrawal and point-of-sale limitations. Acceptance of paycards at many locations.

Deschutes Companies located in Oregon has a SUTA tax rate of 4.10% and a wage base of $36,900. During the last calendar year, the company paid $393,750 in wages and salaries for 11 employees. What is the total of the FUTA and SUTA tax liabilities for Deschutes Companies? (Assume that all employees have exceeded the FUTA and SUTA wage bases.)

+$17,103.90

Cordelia is an employee of Snaktyme Foods in Missouri. She earns $24,000 annually. Snaktyme has provided uniforms worth $350 and training worth $850 as part of her employment. She contributes 4% to her 401(k), of which her employer matches half. Cordelia's employer pays the following monthly amounts toward her insurance: health, $125; life, $50; AD&D, $30. Snaktyme Foods pays employer-only taxes and insurance that comprises an additional 14% of Cordelia's annual salary. What is Cordelia's total annual compensation?

+$31,500

Jesse is a part-time nonexempt employee in Austin, Texas, who earns $12.50 per hour. During the last biweekly pay period he worked 35 hours. He is married with zero withholding allowances, which means his federal income tax deduction is $10.00, and has additional federal tax withholding of $30 per pay period. What is his net pay? (Do not round interim calculations, only round final answer to two decimal points.)

+$364.03

Leah works for Toffolon Technicians in New Hampshire, where she earns $30,000 annually. She contributes 3% to her 401(k), of which her employer matches 1.5%. Her employer contributes $200 per month for her health insurance, $50 per month for her life insurance, and $25 per month for her AD&D insurance. Toffolon Technicians pays employer-only taxes and insurance that comprises an additional 15% of Leah's annual salary. What is Leah's total annual compensation?

+$38,250

Paolo is a part-time security guard for a local facility. He earned $298.50 during the most recent weekly pay period and has earned $5,296.00 year-to-date. He is married with four withholding allowances. What is his Medicare tax liability for the pay period?

+$4.33

John works for Heinlein Hillclimbers in Wyoming, where he earns $26,500 annually. He contributes $150 per month to his 401(k), of which his employer matches half of his contribution. Heinlein Hillclimbers contributes $150 per month to his health insurance, $30 per month to his life insurance, and $50 per month to his AD&D policy. He receives a 2% profit-sharing bonus at the end of each year and $5,250 in tuition reimbursement. Heinlein pays employer-only taxes and insurance that comprises an additional 18% of John's annual salary. What is John's total annual compensation?

+$40,710.00

Maeisha works for Brown Corporation, where she earns $45,000. Her employer contributes 1% of her pay to her pension fund and pays the following monthly amounts for her insurance: health, $300; life, $50; AD&D, $25. She receives $40 per month for her gym membership and receives a $400 bonus at the end of the year. Brown Corporation pays employer-only taxes and insurance that comprises an additional 12% of Maiesha's annual salary. What is Maeisha's total annual compensation?

+$56,230.00

Johnny's Tavern had 16 employees and total annual wages of $376,948 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

Which copy of Form W-2 should be retained by the employee?

+Copy C

Patalano's Pros is a semi-weekly schedule depositor. Which forms must they file to reconcile their payroll taxes?

+Form 941 and Schedule B

Andreosatos Enterprises has received a letter from the IRS that due to their tax liability of $1,950 during the lookback period, they are an annual depositor. Which tax form should they file to report their payroll taxes?

+Form 944

Which of the following best describes the function of a benefit analysis report?

+It is an analysis of the effect of labor costs on departmental profitability.

_________________________ allows firms to allocate costs accurately among departments.

+Labor distribution

The time period that the IRS uses to determine a firm's payroll tax deposit schedule is called the:

+Lookback period.

Van Buuren Enterprises had payroll tax liability of $42,450 during the lookback period. How frequently will the firm deposit its payroll taxes?

+Monthly

A(n) _________________ reflects the total of salary/wages, bonuses, benefits, and employer paid costs in an employee's pay.

+Total compensation report

Davis Reyes is the accounting for Heads Up Hat Corporation. As he prepares the payroll for the semimonthly pay period ending December 15, he notices that some of the year-to-date executives' salaries have exceeded $200,000. What payroll tax responsibilities does Heads Up Hat Corporation have, especially regarding FICA taxes?

-Social security tax must be deducted from the executives' pay for those under the cap and matched by the corporation. unchecked +An additional 0.9 percent Medicare tax must be deducted from the executives' pay for those over the base, but no corporate match is required. checked -Medicare taxes should be deducted from all employees' pay and matched by the corporation. unchecked +An additional 0.9 percent Medicare tax must be deducted from the employees' pay for those over the base and matched by the corporation.

Which of the following represents the difference between the benefit analysis report and the annual total compensation report?

-The benefit analysis report reflects actual benefit costs, and the annual total compensation report includes salary data. - The annual total compensation report's intended audience is company managers.

Wade Pools Company files its second-quarter Form 941 on August 21, after receiving notice from the IRS of the missing form. What is the failure to file penalty?

10 percent (page 266)

At what income level do employees contribute an additional percentage to their Medicare tax deduction?

200,000

Joey Martel is an employee of Overclock Watches. His employer would like to give him a bonus and has asked you to gross it up to ensure that Joey receives the full amount of the desired award. Which of the following should be considered in the denominator to compute the grossed-up amount?

401(k) contribution, Income taxe/s

As of 2017, which of the following accurately represents the full FUTA rate and wage base?

6.0 percent, $7,000

Which of the following are the rates for Social Security and Medicare taxes, respectively?

6.2%, 1.45%

At the end of the financial period, the payroll accountant records the _____________ of the employee's pay that is earned but not yet paid; in the next financial period, this entry is _______________.

Accrual; reversed

Which of the following represent(s) the purpose(s) of the labor distribution report?

Accurate payroll cost allocation among departments Determination of departmental performance Explanation of individual employee costs.

Which of the following are steps in computing federal income tax withholding using the percentage method?

Apply the tax rate to the taxable portion of the earnings. Add the marginal tax. Compute and deduct withholding allowance.

A(n) ________________ is a collection of cash and other items that are used in the operation of the business.

Assets

The _________________ reflects all unpaid payroll liabilities at any point in the financial period.

Balance sheet

The Foggy Snail Theater has annual payroll taxes of $49,250 during the most recent lookback period. Which payroll deposit frequency will the company have, based on that lookback period?

Because the total amount was less than 50000 it is classified as a monthly schedule payroll tax depositor and due dates are the 15th of the following month.

Which of the following are true about Social Security and Medicare tax deductions?

Certain pre-tax deductions are exempt from Social Security and Medicare tax computations

In which order are transactions listed in the General Journal?

Chronologically

Margarita Sutton is preparing a training session for her colleagues about payroll check fraud Which of the following may be indicators of check fraud?

Company logo on the face of the check. Check number is missing from the check.

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.

Chastity Santos is in the process of computing net pay for the employees of Happy Crab Marketing.

Compute pre-tax deduction

As of the June 11 pay date, the General Ledger account for Burling Mills has a balance of $14,289 in its Federal withholding tax payable account. A credit of $16,250 is recorded on the June 25 pay date. What is the balance in the account?

Credit $30,539

Enchanted Creations has the following data in its Federal withholding tax payable General Ledger account What is the balance of the account as of April 30?

Credit $49,485

Frellies Gym has a credit balance of $31,485.27 in its Wages and Salaries Payable General Ledger account as of August 16. If the pay date is August 16, what transaction should appear in the Wages and Salaries Payable General Ledger account on that date?

Debit $31,485.27

Supermeg Dry Cleaners had the following payroll data for its May 14 pay date: When the firm remits its health insurance premium for this pay date, what is the General Journal entry?

Debit Health Insurance Payable $13,618.71; Credit Cash $13,618.71

Supermeg Dry Cleaners had the following payroll data for its May 14 pay date: When the firm remits the union dues for this pay period, what is the correct General Journal entry?

Debit Union Dues Payable $4,683.19; Credit Cash $4,683.19

Daryl Simpson is the owner of Padua Products. During the holiday season, he wants to reward his employees for their work during the year, and he has asked you to gross up their bonuses so that they receive the full amount as net pay. Required: What amount(s) should you consider when computing the grossed-up pay?

Desired bonus amount. Social Security and Medicare taxes. Income tax(es).

Petra Stevens is the accountant for FAB Products, a newly formed company. She is exploring employee pay methods. Which of the following describes a method in which employee earnings is transferred automatically from the employer's bank account to the employee's bank account?

Direct deposit

Electronic tax deposits are usually processed through the:

EFTPS

The _______ is the master document that contains an employee's marital status, deductions, and year-to-date earnings.

Employee earnings record

Which of the following reports links the accounting and the human resources departments?

Employee earnings record

Which of the following is true about the cost of employees within a business context?

Employees comprise a significant cost of conducting business. Hiring employees involves a significant overhead cost.

Which of the following is true about employee pay methods?

Employers must keep a record of all pay disbursements. Paycards may be reloaded with an employee's net pay on the pay date.

Which of the following are employer-only payroll obligations?

FUTA SUTA

Which of the following is/are true about FUTA obligations?

FUTA is an employer-only tax. FUTA is subject to a 7000 wage base per employee

Of the following taxes, which one(s) is/are examples of statutory deductions that pertain to employers?

FUTA, Social Security tax

What are the penalties associated with the lack of reporting and remitting payroll taxes?

Failure to file Failure to deposit

Which body issued Regulation E to protect consumers from loss of deposited funds?

Federal Deposit Insurance Corporation

Which of the following payroll items is included on the Balance Sheet?

Federal withholding tax payable

The IRS uses the ___________________________ to determine how often a company must deposit payroll taxes.

Financial statements

Which form(s) should be prepared and filed by companies with employees and payroll tax liabilities exceeding $50,000 as of December 31, 20XX?

Form 940 Form W-2 Form 941

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 layoff 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

In the following General Journal transaction, to what do the numbers 101 and 301 refer?

General Ledger account numbers

When journalizing the employees' pay accrual, the _______________ is/are the debit(s), and the _____________ is one of the credits

Gross pay; net pay

When a payroll check is subject to escheatment, who handles the distribution of the money?

It depends on state laws.

What does the term "billable time" mean as it pertains to payroll accounting?

It is employee labor that may be billed to customers.

When a firm has wages earned but not yet paid at the end of a financial reporting period, what must it do to recognize the liabilities and expenses?

It must create an adjusting entry to recognize the payroll accrual.

What is an advantage of direct deposit from the employee's perspective?

Long processing times for pay disbursements. Secure access to compensation. (wrong)-The requirement to have a bank account. Access to payroll data on non-secured website.

Sunny Day Flooring has employees in its manufacturing, sales, and administrative departments. Which department will have the highest rate for its workers' compensation insurance?

Manufacturing

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?

Marital status

Liam Figueroa is the payroll accountant for Chop Brothers Coffee. As he prepares to use wage-bracket tables to determine federal income tax withholdings for each employee, which information should he have available?

Marital status Number of withholding allowances Year-to-date earnings

Of the IRS-stipulated lookback periods, which one(s) are the most commonly used?

Monthly and Semiweekly

Which of the following is true about state and local income tax?

Nine states do not have a personal income tax on earnings. State income tax computations vary among states.

Which of the following is true about Social Security and Medicare taxes as they pertain to earnings limits?

Once an employee's year-to-date earnings exceed the wage base, no additional Social Security tax is withheld. Employees who earn more than $200,000 annually are subject to additional Medicare tax withholding.

Teddy Harrington is a new payroll clerk with B&H Farms. As he prepares to use the wage-bracket tables to determine federal income tax withholdings, what information does he need for each employee?

Pay frequency Taxable income

What is the term for transferring data from the General Journal to the General Ledger?

Posting

Joyce Hunter is the new payroll accountant with Rainy Snake Products in Sparks, Nevada. The company had a payroll tax liability of $250,350 during the most recent lookback period. For the quarter ending September 30, 20XX, which federal form(s) should She file?

Quarterly report Form 941

Which of the following is an example of a liability account?

Salaries Payable

Which of the following statements are true about state and local income taxes?

State tax rates on employee earnings vary among states. Some localities levy income tax on employees. Certain states have no personal income tax deduction

Post-Tax Deductions are amounts ________

That Include both mandatory and voluntary deductions

Which of the following is a characteristic of workers' compensation?

The cost of workers' compensation represents a labor expense to the business. Workers' compensation is provided to cover employees who are injured or killed while performing work duties. Workers' compensation is an insurance policy.

Faith, the accountant for Harris's Meats, filed Form 941 for the first quarter on May 12. The amount of taxes due to be paid with Form 941 was $8,975. The first failure to file notice was dated May 5. What is the amount that must be remitted, including the IRS penalty for the failure to file?

The due date to file under IRS was April 15. The return was filed on May 12. Hence the penalty of 5% on additional tax of $8975 for 2 months shall apply. Amount of penalty = $8975 x 5% x 2 = $897.5 Amount to be remitted including the IRS penalty for the failure to file = $8975 + $897.5 = $9872.5 The answer is d.$9,872.50

Which report contains employer share tax expenses for a period?

The income statement

Rosa Pierce is a payroll clerk at Hot Tree Hand Tools. She receives a written notice from the IRS that the company is a semiweekly schedule depositor. How is the deposit schedule determined?

The payroll tax liability during the lookback period.

Why is it important to prepare the benefit analysis report or the total compensation report?

The reports promote employee education about the total value of their salary and benefits. The reports inform labor planning and employer cost strategies.

In what order are accounts presented on the trial balance?

The same as the chart of accounts

Rushing River Boats has the following data in its Social Security tax payable General Ledger account: For the entry on January 31, what does the J4 signify?

The transaction appears on page four of the General Journal.

Winston Briggs is the accounting supervisor for Cheeky Cat Furnishings, which has chosen to maintain its payroll on an in-house basis for this purpose and has hired new accounting clerks. Which of the following are payroll responsibilities of Cheeky Cat Furnishings?

Timely remittance of payroll taxes. Remittance of voluntary deductions Accountability to employees and governmental agencies

Which of the following represent the purpose(s) of the benefit analysis report?

Understanding of employer and employee benefits costs. Benchmarking with other companies. checked Correct Identification of opportunities for increasing profitability.

From the employer's perspective, which of the following is a challenge of paying employees by direct deposit?

Vulnerability of data to computer attacks

Which of the following is a form that must accompany all Forms W-2 submitted to the Social Security Administration?

W-3

What are the two methods payroll accountants use to determine federal income tax withholding amounts?

Wage-bracket method Percentage method

Which of the following states does not withhold employee income tax?

Washington Florida Tennessee

Under which circumstances could the percentage method be used to determine federal income tax withholding amounts?

When using a computerized accounting system to compute payroll deductions When computational accuracy is critical When the employee's taxable income exceeds the maximum amount on the appropriate wage-bracket table.

State and Local Income Tax rates

differ among states and localities