Chapter 9, TEST 9B



Chapter 9 TEST 9B

Name _________________________

Date _________________________

SCORING RECORD

| |Total Possible | |Student |

|Section | |Deductions |Score |

|A |30 | | |

|B |30 | | |

|C |10 | | |

|D |30 | | |

|Total |100 | | |

Section A

DIRECTIONS: Each of the following statements is true or false. Indicate your choice by writing in the Answers column T for a true answer or F for a false answer. For

(2 points for each correct answer) Answers Scoring

1. The employer FICA tax is levied on employers at

a higher rate but on the same earnings base as

the employee FICA tax. _____ _____

2. The payroll register is a key source of information

for computing employer payroll taxes. _____ _____

3. Self-employment income is the net income of a trade

or business run by an individual. _____ _____

4. The self-employment tax rate is double the rate for

Social Security and Medicare. _____ _____

5. Worker’s compensation provides insurance for

employees who suffer a job-related illness or

injury and is paid for by the employees. _____ _____

6. The FUTA tax may be deducted from the employee's

earnings. _____ _____

7. Journalizing payroll taxes for the employer will

require several debit entries but only one credit

entry. _____ _____

8. Social Security, Medicare, FUTA, and SUTA taxes

have separate liability accounts. _____ _____

9. The date on which taxes are due for the employer

depends on the total amount of the taxes due. _____ _____

10. The IRS prints the deposit rules in a tax guide

for employers called the Circular E. _____ _____

11. Under a merit rating system, an employer can

qualify for a lower state unemployment rate if

fewer employees receive unemployment compensation. _____ _____

12. Form 941, Employer's Quarterly Federal Tax Return,

must be filed with the IRS at the end of the month

following each calendar quarter. _____ _____

13. The payroll taxes imposed on the employer are

debited to Sales & Wages Expense. _____ _____

14. By April 15 each year, employers must furnish each

employee with a Form W-2 Wage and Tax Statement. _____ _____

15. The cost of insurance to a construction company

with 700 employees would be higher than the cost

of insurance to a small candy company with only

50 employees. _____ _____

Section B

Directions: Complete each of the following statements by writing in the Answers column the letter of the word or words that correctly completes each statement. (3 points each)

For

Answers Scoring

1. A key source of information for computing

employer payroll taxes is: (A) the end-of-period

balance sheet; (B) income statement; (C) the

payroll register; (D) the employees' check stubs;

(E) the statement of owner's equity. _____ _____

2. The following is a tax paid by both the employee

and the employer: (A) FICA tax; (B) FUTA tax;

(C) property tax; (D) SUTA tax; (E) none of above. _____ _____

3. The self-employment tax rate is twice the

rate of: (A) Social Security and Medicare taxes;

(B) FUTA taxes; (C) SUTA taxes; (D) property taxes;

(E) taxes. _____ _____

4. Marcia Adkins has gross earnings of $600 and

withholdings of $37.20 for Social Security tax,

$8.80 for Medicare tax, and $70 for federal income

tax. Her employer pays $37.20 for Social Security

tax, $8.80 for Medicare tax, $5 for FUTA tax, and

$30 for SUTA tax. The total cost of Adkins to her

employer is: (A) $46; (B) $81; (C) $600; (D) $646;

(E) $681. _____ _____

5. The adjustment to journalize an additional premium

due at the end of the year for worker’s compensation

insurance (WCI) is: (A) credit WCI Expense; (B) debit

WCI Payable; (C) credit WCI Payable; (D) debit cash;

(E) none of these. _____ _____

6. Which of the following is not added to gross pay to

determine the total cost of an employee to an

employer: (A) FUTA; (B) Medicare; (C) SUTA;

(D) Federal Income Tax; (E) Social Security. _____ _____

7. An Employer Identification Number (EIN) is obtained

by the employer from the: (A) nearest Federal

Reserve Bank; (B) CIA; (C) Internal Revenue Service;

(D) any bank; (E) state unemployment office. _____ _____

8. The Employer's Quarterly Federal Tax Return is:

A) a report of Social Security and Medicare

employer taxes; (B) Form 941; (C) a report of

federal, Social Security, and Medicare tax

withholdings; (D) A and B; (E) A, B, and C. _____ _____

9. When all the taxes have been recorded but not paid,

the liability account will have: (A) a debit

balance; (B) a credit balance; (C) a zero balance;

(D) no balance; (E) a new balance showing expected

taxes for the next year. _____ _____

10. The cost of worker's compensation insurance for the

employer depends on: (A) the number of employees;

A) the riskiness of the jobs the employees

perform; (C) the company's accident history;

(D) the amount of FICA, FUTA, and SUTA taxes due;

(E) A, B, and C. _____ _____

Section C

DIRECTIONS: (2 points each)

Patrick’s Car Wash estimated payroll for the year at $120,000. The workers compensation premium rate is .3%.

1. Journalize the transaction to record payment of the insurance on January 1.

2. Assume the actual payroll at the end of the year is $142,000. prepare the journal entry to record this adjustment as of December 31. Any underpayment or overpayment will be received or paid in the next year.

| | | | | | | |

Section D

(30 points)

Information from the payroll register of Highland Lumber Company for the week ended August 15, 20--, is shown below. The SUTA Rate is 5.4% and the FUTA rate is .8%, both on the first $7,000 of earnings. Social Security is 6.2% of the first $76,200 of earnings. Medicare is 1.45% on gross earnings.

1. Complete the chart below and calculate the employers payroll taxes.

|Employee |Cumulative Pay |Current |Taxable |Taxable |

|Name |Before |Weekly |Earnings |Earnings |

| |Current Earnings |Earnings |Unemployment |Social |

| | | | |Security |

|J. Bati |78,600 |3,000 | | |

|A. Jackson |6,300 |1,200 | | |

|M. Rubio |7,900 |600 | | |

|N. Nguyen |75,200 |2,000 | | |

|D. Alvarez |68,000 |4,400 | | |

2. Prepare the journal entry to record the employers payroll taxes for the week ended August 15, 20--.

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