Deck 10: Payroll Liabilities

Question 1

Employment Insurance is levied equally on the employee and the employer.

Answer 1

False

Question 2

Federal income taxes are withheld from wages earned, except the withholding stops each year as soon as the employee has earned $34,900.

Answer 2

False

Question 3

The Employee's Individual Earnings Record serves as a subsidiary ledger to the Payroll Register account in the General Ledger.

Answer 3

False

Question 4

An employer incurs a Canada Pension Plan expense equal to the sum of the CPP withheld from the wages of all its employees.

Question 5

Overtime premium pay is not subject to income tax deductions.

Question 6

Employment Insurance is withheld from employees' wages at the rate of 1.83% on only the first $100 earned weekly.

Question 7

Payroll taxes levied on employers include Canada Pension and Employment Insurance.

Question 8

The amount of federal income tax to be withheld from each employee's wages is determined solely by the amount of wages earned.

Question 9

Canada Pension Plan is levied equally on the employee and the employer.

Question 10

Employee income taxes are paid solely by employers based on a percentage of total wages earned by the employee.

Question 11

Since federal income taxes withheld from an employee's wages are expenses of the employee, not the employer, they should not be treated as liabilities of the employer.

Question 12

Canada Pension Plan is withheld from wages earned, except the withholding stops each year as soon as the employee has earned the maximum pensionable earnings for that year.

Question 13

Since payroll taxes are levied on wages actually paid, there is no legal liability for payroll taxes associated with the accrual of wages.

Question 14

Canada Pension Plan deductions are social security taxes.

Question 15

In accounting for payrolls, the Payroll Register is a book of original entry which is used for journalizing payroll information.

Question 16

Employment Insurance is withheld from wages earned, with the withholding to stop in 2018 as soon as the employee has earned $4,500.

Question 17

The same form is used to report both Canada Pension and employee income taxes withheld.

Question 18

The same form is used to report both the employer share of payroll taxes and employee income taxes withheld.

Question 19

According to law, a T-4 form showing wages earned and taxes withheld must be given each employee within two months after the calendar year-end.

Question 20

Employers and employees both must pay Employment Insurance based on a percentage of the employees' total wages, up to a yearly maximum.

Question 21

A payroll deduction required by the federal government and used to pay the cost of the employment insurance programs is called

A) Periodic employment tax
B) Employment insurance
C) Provincial employment tax
D) Joint employment tax
E) Contribution employment tax

Question 22

The Payroll Register provides the information needed to pay employees.

Question 23

Payroll taxes and employee fringe benefits sometimes amount to more than 25 percent of the wages earned by employees.

Question 24

Accrued wages are subject to payroll taxes before they are paid.

Question 25

In some jurisdictions, paid annual vacation pay is mandatory and required by law.

Question 26

The Payroll Register is generally used to post information directly to the accounts.

Question 27

After posting the entries to record salary expenses and payroll expenses, Alpha Company's Employment Insurance Payable account has a $9,000 credit balance. This means that the payroll tax expense of Alpha Company included a $9,000 expense resulting from Employment Insurance.

Question 28

Payroll taxes are levied on wages actually paid, not on accrued wages.

Question 29

The payroll tax liabilities arising from a given pay period are likely to be larger than the payroll tax expenses.

Question 30

If a company experiences a low turnover rate, vacation pay should be expensed when an employee actually takes the vacation.

Question 31

The entry to record payroll includes a debit to salaries payable.

Question 32

Employee (fringe) benefit costs represent expenses to the employer in addition to the direct costs of salaries and wages.

Question 33

After posting the entries to record salary expenses and payroll tax expenses, the income taxes payable account of Halpha Company has a $9,000 credit expense resulting from income taxes.

Question 34

To account for vacation pay, employers should record the vacation pay expense in the accounting period when it is paid.

Question 35

Since Red River Company experienced very few on the job accidents, the company has received a very favourable rating. As a result, it should expect to pay substantially smaller amounts of employment insurance premiums than normal.

Question 36

Each time a payroll is recorded, a General Journal entry should also be made to record the employer's CPP and EI amounts payable.

Question 37

To account for vacation pay, an employer should estimate the amount to be paid and record it as an expense of the weeks during which the employees are working and earning the vacation time.

Question 38

A Payroll Register is a record for a pay period that shows the pay period dates and the hours worked, gross pay, deductions, and net pay of each employee.

Question 39

Most employers promise and grant their employees an annual paid vacation.

Question 40

The payroll tax liabilities arising from a given pay period are likely to be smaller than the payroll tax expenses.

Question 41

Williams Inc. has collected payroll data for the most recent weekly pay period.
CPP is 4.95% on the annual pensionable earnings of $50,100 ($55,900 maximum with the first $3,500 exempt), matched by the employer, and EI is 1.66% to a maximum of $51,700 annually, with the employer paying 1.4 times the employees' contributions. Williams' pension plan allows the employee to make designated contributions which are matched by the company.
F.Fillip is an administrative employee, and the other employees are shop workers. Employees are paid time and a half for any overtime work. Prepare the journal entries to record:(a) The payroll accrual.(b) The employer payroll tax expense.(c) The employees' fringe benefits.

*Note that K.Frank would have already paid the maximum CPP and EI for the year.

Question 42

Most employers engaged in employing workers must pay

A) Workers' Compensation
B) Employment Insurance
C) Canada Pension Plan
D) Vacation pay
E) All of these

Question 43

Welch Company has 7 sales employees, each of whom earns $2,500 per month and is paid the last working day of the month. CPP is 4.95% and EI is 1.66%. Withholdings for the employees also include federal and provincial income tax of $2,800 (total for all five) and medical insurance premiums of $210 for each employee.
1) Prepare the general journal entry to accrue the payroll on March.
2) Prepare the general journal entry to record Welch Company's payroll tax expense for March.

Question 44

The payroll records of Jasper Co. provide the following data for the weekly pay period ended March 7.
CPP is 4.95% and EI is 1.66%.
1) Prepare the general journal entry to accrue the payroll on March 7.
2) Prepare the general journal entry to record the payroll tax expense for March 7.

Question 45

A company's sales personnel earned salaries of $15,000 during the pay period December 5-10, all of which were subject to 1.66% EI withholdings. All employees had reached the annual maximum earnings for the Canada Pension Plan. In addition, the company has agreed with its employees to withhold the following amounts: $900 for hospital insurance, $2,600 for federal and provincial income taxes, and $180 for union dues. Calculate the general journal entry credit amount on December 10 to "Salaries Payable."

A) $15,000.00
B) $11,071.00
C) $16,700.00
D) $13,250.00
E) Some other amount

Question 46

A record of an employee's hours worked, gross pay, deductions, net pay, and certain personal information about the employee is an employee's

A) Time card
B) Federal tax record
C) Canada Revenue Agency record
D) Individual earnings record
E) T-4 earnings record

Question 47

Net pay is

A) The amount of an employee's pay due for income taxes
B) Gross pay minus source deductions
C) The amount of an employee's pay before any deductions
D) Gross pay plus employer's taxes
E) None of these

Question 48

Employers never make deductions from employees' wages for

A) Canada Pension Plan
B) Federal income taxes
C) Union dues
D) Employment Insurance
E) Workers' Compensation

Question 49

The statute that requires an employer to complete a record of employment due to termination, illness, injury or pregnancy is called the

A) Income Tax Act
B) Employment Insurance Act
C) Canada Pension Plan Act
D) R&R Act
E) Workers' Compensation Act

Question 50

A tax levied on the amount of a payroll or on the amount of an employee's gross pay is a(n)

A) Federal program
B) Excess profits tax
C) Employer tax
D) Payroll tax
E) Employee tax

Question 51

An amount of an employee's annual earnings not subject to income tax is the

A) Employment insurance allowance
B) Canada Pension Plan allowance
C) Workers' allowance
D) Basic personal amount
E) Workers' compensation allowance

Question 52

Small Company's 16 sales personnel earned total salaries of $18,000 during the period April 5-10, all of which were subject to 4.95% CPP, 1.66% EI. The employees were also entitled to 6% annual vacation pay. Prepare the general journal entries on April 10 to accrue the payroll benefits arising from this payroll.

Question 53

Valentina company has 9 employees who earned a total of $27,000 in June ($3,000 each). CPP deductions are 4.95% paid by the employees and 4.95% paid by the employer. Income tax withholdings amount to $4,500. The employee EI rate is 1.66%. The take-home pay of the 9 employees for June is

A) $27,000.00
B) $22,002.90
C) $19.960.50
D) $19,478.40
E) $20,715.30

Question 54

Haines Company prepared the following payroll summary for the current month:
CPP is 4.95% and EI is 1.66%, and none of the current month's salaries and wages exceed the CPP or EI limits. Haines makes a pension contribution equal to 9% of each employee's gross earnings. A vacation pay accrual is also made at 3.6% of the gross earnings. Haines has 10 employees. Prepare the journal entries to record:(A) The month's payroll accrual.(B) The month's employer payroll tax expense.(C) The employer's pension contribution and vacation pay accrual.

Question 55

Stellar Company employees had the following earnings records at the close of the April 30 payroll period: Stellar Company's payroll benefits expense for each employee includes: 4.95% CPP and 1.66% EI on the amount earned. What is the total payroll benefits expense for the November 30 pay period?

A) $991.50
B) $742.50
C) $348.60
D) $1,091.10
E) $796.11

Question 56

A tax levied by a province, the proceeds of which are used to pay benefits to workers who have been injured on the job, is called

A) Management tax
B) Benefits tax
C) Workers' Compensation
D) Owner's equity tax
E) Provincial employment tax

Question 57

A company's 18 sales personnel earned salaries of $22,000 during the period March 5-10, all of which were subject to 4.95% CPP and 1.66% EI. All personnel are entitled to 2 weeks' paid annual vacation. In addition, the company has agreed with its employees to withhold the following amounts: $900 for hospital insurance, $4,400 for federal and provincial income taxes, and $180 for union dues. Prepare the March 10 general journal entry to record the payroll.

Question 58

The amount an employee earns before any deductions such as EI, CPP, and income tax withholdings is the

A) Deductible pay
B) Taxable income
C) Net pay
D) Gross pay
E) Take home pay

Question 59

A company has 10 employees who earned a total of $30,000 in January ($3,000 each). CPP taxes are 4.95% paid by employees and 4.95% paid by the employer. Income tax withholdings amount to $4,500. The employee EI rate is 1.66% of the total, and the employer EI contribution is 1.4 times the employee portion. The gross pay of the 10 employees during January is

A) $33,209
B) $33,113
C) $30,000
D) $29,190
E) $28,230

Question 60

Spieth Company employees had the following earnings records at the close of the November 30 payroll period.
Spieth Company's payroll taxes expense for each employee include: 4.95% CPP on the annual pensionable earnings 50,100 ($55,900 maximum with the first $3,500 exempt), and 1.4 times the employees EI rate of 1.66% paid to a maximum of $51,700 annually. As well, $300 in federal and provincial income taxes will be deducted from the employees' gross pay for the week. Prepare the journal entries to record:(a) The payroll accrual.(b) The employer payroll tax expense.
Note that R. Scott would have already paid the maximum CPP and EI for the year

Question 61

Jack Slack is CEO of Slack Industries. The bank declined to give Slack Industries the needed funds to finance the business expansion plans. Jack is now looking for ways to secure cash hoping he can get sufficient cash to finance the expansion. Jack approaches you as the company's accountant. He knows that you are due to make government remittances for source deductions the company withheld from employees for CPP, EI, and personal income taxes. Jack asks you to delay the remittance until he feels more confident about getting other financing. Jack believes it is fine to delay payments because Slack will definitely remit the withholdings before the T4s are produced at year end. Required: a) Describe the duty that Slack Industries has to remit employee deductions withheld at source? b) Is withholding the remittances ethical? Why?