Deck 8: Paying, Recording, and Reporting Payroll and Payroll Taxes:

Question 1

Why would a company use a separate payroll cash account?

A) Provides for better internal control
B) Ease of account reconciliation
C) Determine whether or not the employee has cashed their check
D) All of the above are correct.

Answer 1

D

Question 2

The information needed to make the journal entries to record the wages and salaries expense comes from:

A) form W-2.
B) form W-4.
C) the payroll register.
D) form 941.

Answer 2

C

Question 3

Which of the following statements is true?

A) Payroll Tax Expense increases on the debit side of the account.
B) FICA-OASDI Payable is a Liability.
C) Payroll Tax Expense has a debit normal balance.
D) All of these answers are correct.

Answer 3

D

Question 4

Gail's Bakery had the following information before the pay period ending June 30:
Assume: Each hourly employee is paid 1½ times pay rate for time worked in excess of 40 hours.
FICA-OASDI applied to the first $128,400 at a rate of 6.2%.
FICA-Medicare applied at a rate of 1.45%.
FUTA applied to the first $7,000 at a rate of 0.8%.
SUTA applied to the first $7,000 at a rate of 5.6%.
State income tax is 3.8%.
Given the above information, what would be the amount applied to Office Employee Wage Expense?

A) Debit $565
B) Credit $565
C) Debit $510
D) Credit $510

Question 5

Grammy's Bakery had the following information before the pay period ending June 30: Assume: Each hourly employee is paid 1-1/2 times pay rate for time worked in excess of 40 hours.
FICA-OASDI applied to the first $128,400 at a rate of 6.2%.
FICA-Medicare applied at a rate of 1.45%.
FUTA applied to the first $7,000 at a rate of 0.8%.
SUTA applied to the first $7,000 at a rate of 5.6%.
State income tax is 3.8%.
Given the above information, what would be the amount applied to Kitchen Salaries Expense?

A) Debit $12,400
B) Credit $12,400
C) Debit $3,000
D) Credit $3,000

Question 6

The account for Payroll Tax Expense includes all of the following except:

A) federal unemployment taxes.
B) FICA taxes (OASDI and Medicare) paid by the employer for the latest payroll period.
C) state unemployment taxes.
D) federal income tax.

Question 7

The entry to record the payroll tax expense would include:

A) a credit to Federal Income Taxes Payable.
B) a debit to Pre-paid Tax Expense.
C) a credit to FICA (OASDI and Medicare) Taxes Payable.
D) a credit to Wages Payable.

Question 8

What is debited if State Unemployment Tax Payable (SUTA) is credited?

A) Payroll Tax Expense
B) SUTA Tax Payable
C) Pre-paid Payroll Taxes
D) Salaries Expense

Question 9

Wages and Salaries Payable would be used to record:

A) gross earnings of the employees paid.
B) net earnings of the employees not paid.
C) straight-time pay only.
D) the paid portion of the earnings.

Question 10

Form SS-4 is:

A) completed to obtain an EIN.
B) submitted to summarize the W-2 forms to the Social Security Administration.
C) submitted quarterly to pay FIT and FICA taxes.
D) submitted annually to pay unemployment taxes.

Question 11

The entry to record employer's total FICA, SUTA, and FUTA tax would include:

A) a debit to Payroll Tax Expense.
B) a credit to Payroll Tax Expense.
C) a credit to Accounts Payable.
D) a debit to Payroll Tax Payable.

Question 12

The look-back period is used to determine whether:

A) a business should make its Form 941 tax deposits on a monthly or semiweekly basis.
B) an employer will use Form 940.
C) an employer has sent the W-2s to their employees on timely basis.
D) an employer must pay back taxes.

Question 13

Which of the following statements is false?

A) Payroll Tax Expense is an expense account.
B) FICA-OASDI Payable increases on the credit side of the account.
C) Payroll Tax Expense increases on the debit side of the account.
D) FUTA Tax Payable increases on the debit side of the account.

Question 14

Cash - Payroll Checking is a(n):

A) contra-asset.
B) liability.
C) asset.
D) expense.

Question 15

The debit amount to Payroll Tax Expense represents:

A) the employer's portion of the payroll taxes.
B) the employees' portion of the payroll taxes.
C) the employer's and employees' portion of the payroll taxes.
D) None of the above is correct.

Question 16

The Wages and Salaries Expense account would be used to record:

A) net earnings for the office workers.
B) the amount for payroll tax.
C) gross earnings for the office workers.
D) a debit for the amount of net pay owed to the office workers.

Question 17

What type of account is Payroll Tax Expense?

A) Asset
B) Pre-paid liability
C) Contra-revenue
D) Expense

Question 18

What type of an account is Wages and Salaries Payable?

A) Asset
B) Liability
C) Contra-liability
D) Expense

Question 19

When a business starts, what must it obtain that identifies itself to the government?

A) State Employment Number
B) Federal Unemployment Number
C) Employer Identification Number
D) A look-back period

Question 20

A monthly depositor:

A) is an employer who only has to deposit Form 941 taxes on the 15th day of the month (or next banking day).
B) is determined by the amount of Form 941 taxes that they paid in the look-back-period.
C) will remain a monthly depositor, once classified, for one year at which time they will be reevaluated.
D) All of the above answers are correct.

Question 21

The payroll tax expense is recorded quarterly only.

Question 22

Using the information below, determine the amount of the payroll tax expense for B. Hope Company's first payroll of the year. In your answer list the amounts for FICA (OASDI and Medicare), SUTA, and FUTA. Assume:
FICA tax rates are: OASDI 6.2% on a limit of $128,400 and Medicare 1.45%.
State Unemployment tax rate is 5.0% on the first $7,000.
Federal Unemployment tax rate is 0.8% on the first $7,000.

Question 23

The balance in the Wages and Salaries Expense account is equal to the amount of cash paid to the employees.

Question 24

Record in the general journal the payroll tax entry for the week ended August 31. Use the following information gathered to make the entry. a) FICA tax rate is: OASDI 6.2% on a limit of $106,800, and Medicare is 1.45%
b) Federal Unemployment is 0.8% on a limit of $7,000
c) State Unemployment is 2% on a limit of $7,000

Question 25

A company must pay Form 941 taxes electronically if:

A) they do business in multiple states.
B) they pay more than $2,500 in a given quarter.
C) they pay less than $2,500 in a given quarter.
D) The company would never have to pay electronically.

Question 26

A banking day is any day that the bank is open to the public for business.

Question 27

There is no limit on the amount of taxes paid for SUTA.

Question 28

If Wages and Salaries Payable is debited, what account would most likely be credited?

A) Cash
B) Pre-Paid Payroll Expense
C) Payroll Expense
D) SUTA Payable

Question 29

Prepare a general journal payroll entry for Advanced Computer Programming using the following information: Assume the following:
a) FICA: OASDI, 6.2% on a limit of $128,400; Medicare, 1.45%.
b) Federal income tax is 15% of gross pay.
c) Each employee pays $20 per week for medical insurance.

Question 30

FICA taxes are levied only on employees.

Question 31

Payroll information for Kinzer's Interior Decorating for the first week in October is as follows: Taxable earnings subject to Federal and State Unemployment taxes: $5,000
Assume the following tax rates: Required: Prepare the employer's payroll tax entry for Kinzer for the first week of October.

Question 32

FIT Payable has a credit normal balance.

Question 33

Jefferson Tutoring had the following payroll information on February 28: Assume: FICA tax rates are: OASDI 6.2% on a limit of $128,400 and Medicare 1.45%.
State Unemployment tax rate is 2% on the first $7,000.
Federal Unemployment tax rate is 0.8% on the first $7,000.
Using the information above, the journal entry to record the payroll tax expense for Jefferson Tutoring would include:

A) a debit to Payroll Tax Expense in the amount of $429.55.
B) a credit to FUTA Payable for $20.00.
C) a credit to SUTA Payable for $50.00.
D) All of the above are correct.

Question 34

Sweeney's Recording Studio payroll records show the following information: Assume the following:
a) FICA: OASDI, 6.2% on a limit of $128,400; Medicare, 1.45%.
b) Each employee contributes $40 per week for union dues.
c) State income tax is 5% of gross pay.
d) Federal income tax is 20% of gross pay.
Prepare a general journal payroll entry: for the payment of the above weekly salary only.

Question 35

Mike's Door Service's payroll data for the second week of June included the following: Taxable earnings for state unemployment taxes: $2,000
Assume the following tax rates:
FICA-OASDI 6.2%
FICA-Medicare 1.45%
State unemployment 1.5%
Federal unemployment 0.06%
Required: Prepare the payroll tax expense entry for Mike's for the second week of June.

Question 36

An employer must always use a calendar year for payroll purposes.

Question 37

Using the information provided below, prepare a journal entry to record the payroll tax expense for Mr. B's Carpentry. Assume:
FICA tax rates are: OASDI 6.2% on a limit of $128,400 and Medicare 1.45%.
State unemployment tax rate is 2% on the first $7,000.
Federal unemployment tax rate is 0.8% on the first $7,000.

Question 38

Wages and Salaries Expense is:

A) equal to net pay.
B) equal to gross pay.
C) equal to the employer's taxes.
D) equal to wages and salaries paid in cash.

Question 39

What liability account is reduced when the employees are paid?

A) Payroll Taxes Payable
B) Federal Income Taxes Payable
C) Wages and Salaries Payable
D) Wages and Salaries Expense

Question 40

Mid-West Tutoring had the following payroll information on January 31: Assume: FICA tax rates are: OASDI 6.2% on a limit of $128,400 and Medicare 1.45%.
State Unemployment tax rate is 2% on the first $7,000.
Federal Unemployment tax rate is 0.8% on the first $7,000.
Federal Income Tax Withheld $900; State Income Tax Withheld $300.
Using the information above, the journal entry to record the employee's payroll expense would include:

A) a debit to Payroll Tax Expense in the amount of $4,300.
B) a debit to Wages and Salaries Expense in the amount of $4,300.
C) a credit to Cash in the amount of $4,300.
D) a credit to FUTA Payable for $120.

Question 41

A calendar quarter is made up of:

A) 4 months.
B) 13 weeks.
C) 5 weeks.
D) however many weeks are needed to complete the month.

Question 42

The following data applies to the July 15 payroll for the Woodard Research Firm (overtime is paid at 1 1/2) Assume:
FICA-OASDI is 6.2% based on a limit of $128,400.
FICA-Medicare is 1.45%.
FUTA is .8% based on a limit of $7,000.
SUTA is 5.6% based on a limit of $7,000.
State income tax is 2.8%.
Compute the employees' FICA-OASDI.

Question 43

The following data applies to the July 15 payroll for the Woodard Research Firm (overtime is paid at 1 1/2) Assume:
FICA-OASDI is 6.2% based on a limit of $128,400.
FICA-Medicare is 1.45%.
FUTA is .8% based on a limit of $7,000.
SUTA is 5.6% based on a limit of $7,000.
State income tax is 2.8%.
Compute the employees' FICA-Medicare.

Question 44

The entry to record the payment of taxes withheld from employees and FICA taxes would be to:

A) credit Cash; debit FICA-OASDI Payable, FICA-Medicare Payable, and Federal Income Tax Payable.
B) debit Cash; credit FICA-OASDI Payable, FICA-Medicare Payable, and Federal Income Tax Payable.
C) credit Cash; credit FICA-OASDI Payable, FICA-Medicare Payable, and Federal Income Tax Payable.
D) None of these answers is correct.

Question 45

The payment of FUTA would include:

A) a debit to FUTA Payable.
B) a credit to FUTA Payable.
C) a debit to cash.
D) a credit to FUTA Expense.

Question 46

Which form is used to report FICA taxes for the employer and employee, and also federal income taxes for the employee?

A) Form 941
B) Form 944
C) Form 940
D) Form W-2

Question 47

The following data applies to the July 15 payroll for the Woodard Research Firm (overtime is paid at 1 1/2) Assume:
FICA-OASDI is 6.2% based on a limit of $128,400.
FICA-Medicare is 1.45%.
FUTA is .8% based on a limit of $7,000.
SUTA is 5.6% based on a limit of $7,000.
State income tax is 2.8%.
Compute the total federal income tax.

Question 48

Businesses will make their payroll tax deposits based on payroll taxes collected.

Question 49

Which taxes are considered 941 taxes?

A) FICA, FUTA, and SUTA
B) FICA and SIT
C) FICA, FIT, and Workers' Compensation
D) None of these answers is correct.

Question 50

The following data applies to the July 15 payroll for the Woodard Research Firm (overtime is paid at 1 1/2) Assume:
FICA-OASDI is 6.2% based on a limit of $128,400.
FICA-Medicare is 1.45%.
FUTA is .8% based on a limit of $7,000.
SUTA is 5.6% based on a limit of $7,000.
State income tax is 2.8%.
Compute the total overtime earnings.

Question 51

The employer records deductions from the employee's paycheck:

A) as debits to expense accounts.
B) as credits to liability accounts until paid.
C) as debits to asset accounts until paid.
D) as debits to the cash account.

Question 52

The following data applies to the July 15 payroll for the Woodard Research Firm (overtime is paid at 1 1/2) Assume:
FICA-OASDI is 6.2% based on a limit of $128,400.
FICA-Medicare is 1.45%.
FUTA is .8% based on a limit of $7,000.
SUTA is 5.6% based on a limit of $7,000.
State income tax is 2.8%.
Compute the total regular earnings.

Question 53

The form used for the annual federal unemployment taxes is Form 941.

Question 54

Why are the employee deductions recorded as payables on the employer's books?

Question 55

Form 941 is filed:

A) monthly.
B) annually.
C) weekly.
D) quarterly.

Question 56

Why are all of the employer payroll taxes listed in separate payable accounts?

Question 57

Form 941 taxes include OASDI, Medicare, and federal unemployment tax.

Question 58

The following data applies to the July 15 payroll for the Woodard Research Firm (overtime is paid at 1 1/2) Assume:
FICA-OASDI is 6.2% based on a limit of $128,400.
FICA-Medicare is 1.45%.
FUTA is .8% based on a limit of $7,000.
SUTA is 5.6% based on a limit of $7,000.
State income tax is 2.8%.
Compute the total state income tax.

Question 59

The following data applies to the July 15 payroll for the Woodard Research Firm (overtime is paid at 1 1/2) Assume:
FICA-OASDI is 6.2% based on a limit of $128,400.
FICA-Medicare is 1.45%.
FUTA is .8% based on a limit of $7,000.
SUTA is 5.6% based on a limit of $7,000.
State income tax is 2.8%.
Compute the total gross earnings.

Question 60

The same deposit rules apply to employers based on the amount collected and owed by that employer for payroll taxes.

Question 61

Grammy's Bakery had the following information for the pay period ending June 30: Assume: FICA-OASDI applied to the first $128,400 at a rate of 6.2%.
FICA-Medicare applied at a rate of 1.45%.
FUTA applied to the first $7,000 at a rate of 0.8%.
SUTA applied to the first $7,000 at a rate of 5.6%.
State income tax is 3.8%.
Given the above information, what would be the amount applied to FUTA Payable? (Round intermediary calculations to the nearest cent and final answers to the whole dollar.)

A) Debit $4
B) Credit $4
C) Debit $23
D) Credit $23

Question 62

Information to prepare W-2 forms can be obtained from the current payroll register.

Question 63

The following data applies to the July 15 payroll for the Woodard Research Firm (overtime is paid at 1 1/2) Assume:
FICA-OASDI is 6.2% based on a limit of $128,400.
FICA-Medicare is 1.45%.
FUTA is .8% based on a limit of $7,000.
SUTA is 5.6% based on a limit of $7,000.
State income tax is 2.8%.
Compute the employer's payroll taxes.

Question 64

Which form is sent to the Social Security Administration along with the W-2s? It reports total wages, FICA tax withheld, etc., for the previous year.

A) Form W-2
B) Form W-3
C) Form SS-4
D) Form 940

Question 65

A deposit must be made when filing the W-2 form.

Question 66

The following data applies to the July 15 payroll for the Woodard Research Firm (overtime is paid at 1 1/2) Assume:
FICA-OASDI is 6.2% based on a limit of $128,400.
FICA-Medicare is 1.45%.
FUTA is .8% based on a limit of $7,000.
SUTA is 5.6% based on a limit of $7,000.
State income tax is 2.8%.
Compute the net pay for the employees' paychecks.

Question 67

The correct journal entry to record the payment of SUTA is:

A) debit SUTA Expense; credit Cash.
B) debit Cash; credit SUTA Expense.
C) debit Cash; credit SUTA Payable.
D) debit SUTA Payable; credit Cash.

Question 68

How often is a Form 940 filed?

A) Monthly
B) Annually
C) Weekly
D) Quarterly

Question 69

The W-2 is the Wage and Tax Statement.

Question 70

FUTA taxes are paid:

A) by the end of January of the following year if the amount owed is less than $500.
B) by the end of the month following the end of the calendar quarter if the amount owed is more than $500.
C) at the same time as the Form 941 taxes.
D) Both A and B are correct.

Question 71

Which form contains information about gross earnings and is given to the employee by January 31?

A) Form W-2
B) Form W-3
C) Form 941
D) Form W-4E

Question 72

The employer pays the same amount as the employee for Federal Unemployment taxes.

Question 73

Prepare the general journal entry to record the payroll.
___________________________________________ _________ _________
___________________________________________ _________ _________
___________________________________________ _________ _________
___________________________________________ _________ _________
___________________________________________ _________ _________
___________________________________________ _________ _________
___________________________________________ _________ _________
___________________________________________ _________ _________
___________________________________________ _________ _________

Question 74

The following amounts are an expense to the company:

A) FICA-OASDI Payable.
B) FUTA Payable.
C) SUTA Payable.
D) All of the above are correct.

Question 75

Which of the following does NOT apply to both a W-2 and a W-3?

A) Reports the total amount of wages, tips and compensation paid to the employee
B) Reports the total OASDI and Medicare taxes withheld
C) Sent to the Social Security Administration
D) Employees use both forms to prepare their personal tax returns.

Question 76

The employer's annual Federal Unemployment Tax Return is:

A) Form 940.
B) Form 941.
C) Form W-6.
D) Form 8109.

Question 77

If an employer owes less than $2,500 for FICA (OASDI and Medicare) and FIT, they can submit:

A) Form 941.
B) Form 940.
C) Form W-2.
D) Form W-3.

Question 78

Prepare the general journal entry to record the employer's payroll tax expense.
___________________________________________ _________ _________
___________________________________________ _________ _________
___________________________________________ _________ _________
___________________________________________ _________ _________

Question 79

The following data applies to the July 15 payroll for the Woodard Research Firm (overtime is paid at 1 1/2) Assume:
FICA-OASDI is 6.2% based on a limit of $128,400.
FICA-Medicare is 1.45%.
FUTA is .8% based on a limit of $7,000.
SUTA is 5.6% based on a limit of $7,000.
State income tax is 2.8%.
Compute the total deductions for the employees' paychecks.

Question 80

The correct journal entry to record the payment of FUTA is to:

A) debit Cash; credit FUTA Payable.
B) debit FUTA Expense; credit Cash.
C) debit FUTA Payable; credit Cash.
D) debit Cash; credit FUTA Expense.