Deck 11: Payroll Taxes, Deposits, and Reports

Question 1

At the end of each quarter, the individual earnings records are totaled.

Answer 1

True

Question 2

Form 940, which is used to report the employer's federal unemployment tax, must be filed quarterly.

Answer 2

False

Question 3

The information for preparing Form W-2 is obtained from the employees' individual earnings records.

Answer 3

True

Question 4

Sending copies of Form W-2 to each employee marks the end of the payroll procedures for the year.

Question 5

Form 941 must be filed ____________________ time(s) a year.

Question 6

Form 941 is used to report federal income taxes withheld, social security taxes, and ____________________ taxes.

Question 7

If an employee leaves the firm before the end of the year, the employee may ask for and receive Form W-2 within 30 days after the request or after the final wage payment.

Question 8

The entry to record the deposit of federal income taxes withheld includes a ____________________ to the Employee Income Tax Payable account.

Question 9

The entry to record the employer's payroll taxes would include a debit to an expense account and a credit to one or more liability accounts.

Question 10

The employer must issue each employee a Form W-2 by January 15 of the next year.

Question 11

For the purpose of internal control, only the person who prepares payroll checks should distribute them.

Question 12

The frequency of deposits of federal income taxes withheld and social security and Medicare taxes is determined by the amount owed.

Question 13

The entry to record the social security and Medicare taxes levied on a business includes a debit to Payroll Taxes Expense.

Question 14

FUTA tax, like social security tax, is levied on both the employer and the employee and, therefore, is withheld from employee's pay.

Question 15

A business pays ____________________ and Medicare taxes at the same rate and on the same taxable wages as its employees.

Question 16

A business pays the social security tax at the same rate and on the same taxable wages as its employees.

Question 17

The unemployment compensation tax program is often called the unemployment insurance program.

Question 18

To achieve internal control over payroll operations, no changes in employee pay rates should be made without written authorization from management.

Question 19

Form 941, which is used to report employee earnings, the federal income taxes withheld, and the social security and Medicare taxes, must be filed each time a firm makes a required deposit of the taxes due.

Question 20

A firm must issue a Form ____________________ to each employee by January 31 of the year following the year during which the wages were earned.

Question 21

Employees' payments for federal income taxes withheld and social security and Medicare taxes are periodically

A) sent directly to the Internal Revenue Service.
B) deposited in a special-purpose bank account, controlled by the company, until year-end when the funds are sent to the U.S. Treasury Department.
C) sent to the local office of the Internal Revenue Service.
D) deposited in a government-authorized financial institution.

Question 22

The entry to record a payroll tax on the employer would include a debit to a(n) ____________________ account.

Question 23

Firms that provide steady employment may be granted a lower state unemployment tax rate under a(n) ____________________, or merit-rating, system.

Question 24

Federal unemployment tax deposits are made on a ____________________ basis.

Question 25

Form 940 is used to report ____________________ taxes.

Question 26

On Form 941, the Employer's Quarterly Federal Tax Return, a firm calculates its liability for the quarter for

A) federal income taxes withheld, social security and Medicare taxes, and FUTA taxes.
B) federal income taxes withheld and social security and Medicare taxes.
C) social security and Medicare taxes and FUTA taxes.
D) federal and state income taxes withheld.

Question 27

Both the employer and the employee are responsible for paying

A) social security and Medicare taxes.
B) FUTA taxes.
C) social security, Medicare, and FUTA taxes.
D) SUTA taxes.

Question 28

If the actual premium computed at year-end is less than the amount paid at the start of the year, the Workers' Compensation ____________________ account is debited in the adjusting entry.

Question 29

Form ____________________ is often referred to as a withholding statement.

Question 30

The frequency of deposits of federal income taxes withheld and social security and Medicare taxes is most dependent on

A) the amount owed.
B) the number of payroll periods a firm has.
C) the profit reported by the firm.
D) the number of employees on the payroll.

Question 31

Which of the following statements is correct?

A) The accountant obtains information about wages subject to payroll taxes from the payroll register.
B) Most commercial banks are authorized to accept the employee's tax deposits for federal income taxes withheld and the employer's and employees' shares of social security taxes.
C) Payroll tax deposits can be made electronically or using a Federal Tax Deposit Coupon, Form 8109.
D) All of the above statements are correct.

Question 32

Form 941 is filed

A) monthly.
B) quarterly.
C) annually.
D) each payroll period.

Question 33

Only the employer is responsible for paying

A) social security and Medicare taxes.
B) FUTA taxes.
C) social security, Medicare, and FUTA taxes.
D) federal income taxes.

Question 34

Which of the following statements is correct?

A) Form 941 is often referred to as a withholding statement.
B) An employee must attach one copy of Form W-2 to his or her personal federal income tax return.
C) The employer sends one copy of the Form W-2 for each employee to the Internal Revenue Service.
D) None of the above statements is correct.

Question 35

To record a deposit of federal income taxes withheld and social security and Medicare taxes, the accountant would

A) debit an expense account and credit one or more liability accounts.
B) debit an asset account and credit an expense account.
C) debit one or more liability accounts and credit an asset account.
D) debit one or more expense accounts and credit one or more liability accounts.

Question 36

Form 940 must be filed ____________________ time(s) a year.

Question 37

State Unemployment Tax Payable is ____________________ when the tax is paid to the state.

Question 38

Which of the following forms is submitted with a copy of the Form W-2 for each employee to the Social Security Administration?

A) Form W-3
B) Form W-4
C) Form 940
D) Form 941

Question 39

The premium rate on workers' compensation insurance is determined by the ____________________ involved in the work performed.

Question 40

Form ____________________ is submitted with a copy of the Form W-2 for each employee to the Social Security Administration.

Question 41

This preprinted government form is used to report federal unemployment taxes.

A) Form 940
B) Form 941
C) Form 8109
D) Form W-2

Question 42

Which of the following is not an employer payroll tax?

A) federal unemployment tax
B) federal income tax
C) state unemployment tax
D) FICA (Social Security and Medicare)

Question 43

All of the following taxes are withheld from an employee's pay except

A) Federal income tax.
B) SUTA tax.
C) Medicare tax.
D) Social security tax.

Question 44

Each employee of a firm will receive several copies of Form W-2, the Wage and Tax Statement, from the

A) employer with each paycheck.
B) employer once a year.
C) federal government once a year.
D) employer once a quarter.

Question 45

Most states require that the employer file the state return for unemployment taxes

A) monthly.
B) quarterly.
C) annually.
D) each payroll period.

Question 46

Generally, the base earnings subject to state unemployment taxes is

A) smaller than the base for social security.
B) the same as the base for social security.
C) larger than the base for social security.
D) the amount of total earnings.

Question 47

Roy DeSoto earns a regular hourly salary of $24.50. He is paid time-and-a-half for all hours in excess of 40 in the week. For the week ended March 8, 2013, he worked a total of 50 hours. His gross wages year to date, prior to his March 8, paycheck, are $11,980. Social Security Tax is 6.2%, Medicare Tax is 1.45%, federal unemployment tax is .8% and state unemployment tax is 4.2%, both on a maximum of $7,000 of gross wages per year. What is the employer's payroll tax expense for Roy for the week ended March 8, 2013?

A) $154.96
B) $123.97
C) $170.47
D) $103.08

Question 48

Samantha Rodriguez had gross earnings for the pay period ending 10/15/13 of $4,785. Her total gross earnings as of 9/30/13 were $104,500. Social Security taxes are 6.2% on a maximum earnings of $106,800 per year. The Social Security tax due by her employer from her 10/15/13 paychecks is:

A) $297.67
B) $142.60
C) $154.07
D) $192.75

Question 49

Which of the following taxes is not withheld from an employee's pay?

A) Federal income tax
B) Social security tax
C) FUTA tax
D) Medicare tax

Question 50

All of the following are internal control procedures that are recommended to protect payroll operations except

A) assign new employees to work in payroll operations.
B) keep payroll records in locked files.
C) make voluntary deductions from employee earnings based only on a signed authorization from the employee.
D) retain all Forms W-4.

Question 51

Rick O'Shea, the only employee of Hunter Furniture Company, makes $30,000 per year and is paid once a month. For the month of January, his federal income taxes withheld are $180, state income taxes withheld are $37, social security is 6.2% on a maximum wages of $106,800, Medicare tax is 1.45%, State Unemployment Tax is 4.2%, and Federal Unemployment tax is .8%, both on a maximum wages of $7,000 per employee. What is the employer's payroll tax expense from Rick's paycheck?

A) $125.00
B) $191.25
C) $316.25
D) $155.00

Question 52

Tax returns for the federal unemployment tax are due

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

Question 53

To record the deposit of FUTA tax, the accountant would

A) debit Payroll Taxes Expense and credit Federal Unemployment Tax Payable.
B) debit Payroll Taxes Expense and credit Cash.
C) debit Federal Unemployment Tax Payable and credit Cash.
D) debit Social Security Taxes Payable and credit Cash.

Question 54

If at the end of the year the firm owes a balance for workers' compensation insurance, the adjusting entry includes a

A) debit to Workers' Compensation Insurance Payable a credit to Workers' Compensation Insurance Expense.
B) a debit to Workers' Compensation Refund Receivable and a credit to Workers' Compensation Insurance Expense.
C) a debit to Workers' Compensation Insurance Expense and a credit to Workers' Compensation Insurance Payable
D) a debit to Payroll Taxes Expense and a credit to cash.

Question 55

Employers usually record unemployment taxes at the end of each

A) payroll.
B) month.
C) quarter.
D) year.

Question 56

To record the payment of SUTA tax, the accountant would

A) debit Payroll Taxes Expense and credit State Unemployment Tax Payable.
B) debit Payroll Taxes Expense and credit Cash.
C) debit Social Security Taxes Payable and credit Cash.
D) debit State Unemployment Tax Payable and credit Cash.

Question 57

Mr. Zee worked 48 hours during the week ended January 18, 2013. He is paid $10 per hour, and is paid time and a half for all hours over 40 in a week. He had $100 withheld from his pay for federal income taxes, and $20 withheld for health insurance. The combined social security and Medicare tax rate is 7.65%, and the federal and state unemployment tax rates are .8% and 3.8%, respectively. All earnings are taxable. What is the total employer payroll tax expense for Mr. Zee's current paycheck?

A) $63.70
B) $39.78
C) $23.92
D) $0

Question 58

Which of the following statements is not correct?

A) A few states levy an unemployment tax on the employee that must be withheld from the employee's pay.
B) One of the purposes of the unemployment insurance program is to stabilize employment and reduce unemployment.
C) The reduction of state unemployment taxes because of favorable experience ratings reduces the credit allowable against the federal unemployment tax.
D) The unemployment insurance program is a federal program.

Question 59

Alfred Spindle earned gross wages of $1,620 for the week ended June 21, 2013. His gross wages year to date, prior to his June 21 paycheck, are $38,556. He had $88 withheld from his pay for federal income taxes, and $16 for health insurance. Social Security and is 6.2% and Medicare tax is 1.45%; the federal unemployment tax rate is .8% and the state unemployment tax rate is 4.2%, both on a maximum of $7,000 per each employee's annual earnings. What is the total employer payroll tax expense from Alfred's June 21, 2013, paycheck?

A) $204.93
B) $123.93
C) $81.00
D) $0

Question 60

A copy of the Form W-2 for each employee is submitted to the Social Security Administration along with

A) Form 940.
B) Form 941.
C) Form 8109.
D) Form W-3.

Question 61

Compute and record workers' compensation insurance premiums for Beverly Manufacturing as follows:
1. The firm estimates that its office employees will earn $40,000 next year and its factory employees will earn $172,000. The firm pays the following rates for workers' compensation insurance: $0.40 per $100 of wages for the office employees and $3.50 per $100 of wages for the factory employees. Compute the estimated premiums for 2013. On page 9 of a general journal, record the payment of the estimated premium. Date the entry January 12, 2013.
2. On January 3, 2014, an audit of the firm's payroll records for 2013 showed that the firm had actually paid wages of $48,000 to its office employees and $165,000 to its factory employees. Compute the actual premium for the year and the balance due the insurance company or the credit due the firm. In the general journal, record the entry to adjust the Workers' Compensation Insurance Expense as of the end of 2013. Date the entry December 31, 2013.

Question 62

After the Mansley Company paid its employees on July 15, 2013, and recorded the corporation's share of payroll taxes for the payroll paid that date, the firm's general ledger showed a balance of $1,695 in the Social Security Tax Payable account, a balance of $321 in the Medicare Tax Payable account, and a balance of $1,968 in the Employee Income Tax Payable account. On July 16, 2013, the business issued a check to deposit the taxes owed in the local bank. Record this transaction on page 23 of a general journal.

Question 63

Compute and record workers' compensation insurance premiums for Evergreen Manufacturing as follows:
1. The firm estimates that its office employees will earn $49,000 next year and its factory employees will earn $150,000. The firm pays the following rates for workers' compensation insurance: $0.40 per $100 of wages for the office employees and $3.50 per $100 of wages for the factory employees. Compute the estimated premiums for 2013. On page 54 of a general journal, record the payment of the estimated premium. Date the entry January 12, 2013.
2. On January 4, 2014, an audit of the firm's payroll records for 2013 showed that the firm had actually paid wages of $53,000 to its office employees and $161,000 to its factory employees. Compute the actual premium for the year and the balance due the insurance company or the credit due the firm. In the general journal, record the entry to adjust the Workers' Compensation Insurance Expense as of the end of 2013. Date the entry December 31, 2013.

Question 64

Kristy Casey earns $39,000 per year and is paid once a month. For January, she had $188 withheld from her pay for federal income taxes, and $52 withheld for health insurance. Social Security and is 6.2% and Medicare tax is 1.45%; the federal unemployment tax rate is .8% and state unemployment tax rates is 4.2%. What is the total employer payroll tax expense for Kristy's January paycheck?

A) $385.13
B) $162.50
C) $248.63
D) $411.13

Question 65

The payroll register of Reynolds Company showed total employee earnings of $2,320 for the week ended May 10, 2013. Compute the employer's payroll taxes for the period. The tax rates are: Social security tax, 6.2 percent; Medicare tax, 1.45 percent; FUTA tax, 0.8 percent; SUTA tax, 2.2 percent. All earnings are taxable. Record the employer's payroll taxes for the period on page 4 of a general journal.

Question 66

The payroll register of the Retro Manufacturing Company showed total employee earnings of $25,000 for the week ended January 18, 2013. Compute the employer's payroll taxes for the period. Use a rate of 6.2 percent for the employer's share of the social security tax, 1.45 percent for Medicare tax, 0.8 percent for FUTA tax, and 5.4 percent for SUTA tax. All earnings are taxable.

Question 67

For which of the following is there no limit to the amount of wages subject to the tax?

A) federal unemployment tax
B) Medicare tax
C) state unemployment tax
D) Social Security tax

Question 68

The payroll register of Vtech Enterprises showed total employee earnings of $2,100 for the week ended August 2, 2013. Compute the employer's payroll taxes for the period. The tax rates are: Social security tax, 6.2 percent; Medicare tax, 1.45 percent; FUTA tax, 0.8 percent; SUTA tax, 2.2 percent. All earnings are taxable. Record the employer's payroll taxes for the period on page 4 of a general journal.

Question 69

Compute and record workers' compensation insurance premiums for Fairlawn Manufacturing as follows:
1. The firm estimates that its office employees will earn $46,000 next year and its factory employees will earn $162,000. The firm pays the following rates for workers' compensation insurance: $0.40 per $100 of wages for the office employees and $3.50 per $100 of wages for the factory employees. Compute the estimated premiums for 2013. On page 9 of a general journal, record the payment of the estimated premium. Date the entry January 12, 2013.
2. On January 3, 2014, an audit of the firm's payroll records for 2013 showed that the firm had actually paid wages of $48,000 to its office employees and $165,000 to its factory employees. Compute the actual premium for the year and the balance due the insurance company or the credit due the firm. In the general journal, record the entry to adjust the Workers' Compensation Insurance Expense as of the end of 2013. Date the entry December 31, 2013.

Question 70

Wharfside Manufacturing estimates that its office employees will earn $50,000 next year and its factory employees will earn $260,000. The firm pays the following rates for workers' compensation insurance: $0.37 per $100 of wages for the office employees and $4.00 per $100 of wages for the factory employees. Compute the estimated premiums for the office and factory employees.

Question 71

The payroll register of the Hound Manufacturing Company showed total employee earnings of $36,000 for the week ended September 20, 2013. Compute the employer's payroll taxes for the period. Use a rate of 6.2 percent for the employer's share of the social security tax, 1.45 percent for Medicare tax, 0.8 percent for FUTA tax, and 5.4 percent for SUTA tax. All earnings are taxable.

Question 72

The payroll register of the Fox Manufacturing Company showed total employee earnings of $28,000 for the week ended April 19, 2013. Compute the employer's payroll taxes for the period. Use a rate of 6.2 percent for the employer's share of the social security tax, 1.45 percent for Medicare tax, 0.8 percent for FUTA tax, and 5.4 percent for SUTA tax. All earnings are taxable.

Question 73

The payroll register of Rapid Repairs showed total employee earnings of $1,870 for the week ended April 5, 2013. Compute the employer's payroll taxes for the period. The tax rates are: Social security tax, 6.2 percent; Medicare tax, 1.45 percent; FUTA tax, 0.8 percent; SUTA tax, 2.2 percent. All earnings are taxable. Record the employer's payroll taxes for the period on page 4 of a general journal.

Question 74

After the JPR Corporation paid its employees on May 15, 2013, and recorded the corporation's share of payroll taxes for the payroll paid that date, the firm's general ledger showed a balance of $1,730 in the Social Security Tax Payable account, a balance of $356 in the Medicare Tax Payable account, and a balance of $1,972 in the Employee Income Tax Payable account. On May 16, 2013, the business issued a check to deposit the taxes owed in the local bank. Record this transaction on page 7 of a general journal.

Question 75

The payroll register of Burdick Travel Agency showed total employee earnings of $1,450 for the week ended June 7, 2013. Compute the employer's payroll taxes for the period. The tax rates are: Social security tax, 6.2 percent; Medicare tax, 1.45 percent; FUTA tax, 0.8 percent; SUTA tax, 2.2 percent. All earnings are taxable. Record the employer's payroll taxes for the period on page 4 of a general journal.

Question 76

After the Marion Corporation paid its employees on November 15, 2013, and recorded the corporation's share of payroll taxes for the payroll paid that date, the firm's general ledger showed a balance of $1,925 in the Social Security Tax Payable account, a balance of $519 in the Medicare Tax Payable account, and a balance of $2,105 in the Employee Income Tax Payable account. On November 16, 2013, the business issued a check to deposit the taxes owed in the local bank. Record this transaction on page 5 of a general journal.

Question 77

Beachside Manufacturing estimates that its office employees will earn $54,000 next year and its factory employees will earn $280,000. The firm pays the following rates for workers' compensation insurance: $0.40 per $100 of wages for the office employees and $4.10 per $100 of wages for the factory employees. Compute the estimated premiums for the office and factory employees.

Question 78

Orleans Manufacturing estimates that its office employees will earn $75,000 next year and its factory employees will earn $200,000. The firm pays the following rates for workers' compensation insurance: $0.55 per $100 of wages for the office employees and $4.75 per $100 of wages for the factory employees. Compute the estimated premiums for the office and factory employees.

Question 79

After the ABC Corporation paid its employees on June 15, 2013, and recorded the corporation's share of payroll taxes for the payroll paid that date, the firm's general ledger showed a balance of $1,620 in the Social Security Tax Payable account, a balance of $401 in the Medicare Tax Payable account, and a balance of $1,851 in the Employee Income Tax Payable account. On June 16, 2013, the business issued a check to deposit the taxes owed in the local bank. Record this transaction on page 15 of a general journal.

Question 80

Which of the following payroll taxes is not paid by the employee?

A) federal unemployment tax
B) federal income tax
C) state income tax
D) FICA (Social Security and Medicare)