NOTE: In all problems, unless instructed otherwise, compute the hourly and overtime
rates as follows:
1) Carry the hourly rate and the overtime rate to 3 decimal places and then round off to
2 decimal places (round the hourly rate to 2 decimal places before multiplying by one
and one-half to determine the overtime rate).
2) If the third decimal place is 5 or more, round to the next higher cent.
3) If the third decimal place is less than 5, drop the third decimal place. Also, use the
minimum hourly wage of $7.25 in solving these problems and all that follow. Kenneth
Anderson works two separate jobs for Mesa Company. Duringthe week, Job A
consisted of 38 hours at $20 per hour; Job B involved 15 hours at $14 per hour.
The mailing of Form 940 is considered timely if it is postmarked on or before the due
date.
The FLSA requires that workers receive overtime pay for all hours worked in excess of
40 in a workweek.
The FUTA tax part of the payroll tax entry is recorded at the net amount (0.6%) of the
taxable payroll.
The total cost of workers compensation insurance is borne by the employees.
Employers file Form 941 with the IRS center of the region in which the employers
principal place of business is located.
Employees paid by the hour without a guarantee of a weekly minimum salary do not
qualify for the salary test for white-collar workers.
NOTE: In this chapter and in all succeeding work throughout the course, unless
instructed otherwise, use the following rates, ceiling, and maximum taxes.
For rounding rules refer to page 2-33.
*Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable
to self-employed.
In this pay, Moss Company deducted OASDI taxes of $5,276.24
and HI taxes of $1,233.95 from the $85,100.90 of taxable wages
paid. What is Moss Companys portion of the social security taxes for:
The totals from the first payroll of the year are shown below.
1) Journalize the entry to record the payroll.
2) Journalize the entry to record the employers payroll taxes (assume a SUTA rate of
3.7%).
3) Journalize the entry to deposit the FICA and FIT taxes.
4) Journalize the adjustment for accrued wages for the following Monday, which is the
end of the accounting period. The gross payroll for that day is $7,475.
Workers compensation benefits are paid directly to the employer.
An employers social security and withheld income taxes for the quarter are less than
$2,500. The employer must deposit the taxes at its bank at the time of filing the fourth
quarter Form 941.
Before any federal income taxes may be withheld, there must be, or must have been, an
employer-employee relationship.
When the federal tax deposit is made, the employees and employers shares of FICA
taxes are paid along with the employees FIT taxes withheld.
Since vacation time is paid when used, there is no need to accrue this time in a liability
account at the end of each accounting period.
The requisition for personnel form is sent to the Payroll Department so that the new
employee can be properly added to the payroll.
NOTE: In the following problems, use the net FUTA tax rate of 0.6% on the first
$7,000 of taxable wages.
In Part 5 of Form 940, Peterson Company reported FUTA tax liabilities as follows:
List the amounts and the dates of each required FUTA tax payment:
FUTA was designed to ensure that workers who are covered by pension plans receive
benefits from those plans.
An employer can use a credit card to pay the quarterly deposit of FUTA taxes during the
year.