International Business Chapter 8 2 The tax paid by the employer for both the employee and employer

8.3 Learning Objective 8-3

1) The tax paid by the employer for both the employee and employer:

A) must be deposited in an authorized depository.

B) must be deposited directly in the company’s checking account.

C) can be paid when the company is determined to have excess cash.

D) None of these answers are correct.

2) 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 prior year.

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.

3) A calendar quarter is made up of:

A) 4 months.

B) 13 weeks.

C) 12 weeks.

D) however many weeks are needed to complete the month.

4) 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.

5) 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.

6) 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.

7) Workers’ Compensation Insurance is:

A) paid by the employer to protect the employee against job-related injury or death.

B) paid by the employee to protect himself/herself against job–related accidents or death.

C) paid by the employer to protect the employee against non job-related injury or death.

D) paid by the employee to protect himself/herself against non job-related accidents and death.

8) The journal entry to record the estimated advance premium payment for workers’ compensation is:

A)

Cash

Prepaid Insurance, Workers’ Compensation

B)

Prepaid Insurance, Workers’ Compensation

Cash

C)

Workers’ Compensation Insurance Expense

Cash

D)

Workers’ Compensation Insurance Payable

Cash

9) 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 unemployment taxes.

10) Grammy’s Bakery had the following information for the pay period ending June 30:

Employee

Name

Pay

rate

Hours

worked

Cumulative

earnings

Department

Federal

income tax

withheld

P. Ganster

$ 2,000

Salaried

$ 12,000

Kitchen

$ 86.00

T. Baker

10.00/hr

50

6,500

Office

22.00

Assume:

FICA-OASDI applied to the first $106,800 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?

A) Debit $4.00

B) Credit $4.00

C) Debit $20.40

D) Credit $20.40

11) The following amounts are an expense to the company except:

A) FICA-OASDI Payable.

B) FUTA Payable.

C) SUTA Payable.

D) All of the above are correct.

12) A company must pay Form 941 taxes electronically if:

A) they do business in multiple states.

B) they pay more than $200,000 in a given year.

C) they pay less than $200,000 in a given year.

D) The company would never have to pay electronically.

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

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

15) Both employer and employee contribute to FICA-OASDI and SUTA tax.

16) Premiums for worker’s compensation insurance may be adjusted based on actual payroll amounts at

the end of the year.

17) S. Ferrari, an employee of Plum Hollow Country Club, earned $1,100 during the first week of January.

His withholding included: federal income tax, 15%; state income tax, 5%; FICA-OASDI, 6.2%; FICA–

Medicare, 1.45%; and union dues $25. Determine the tax for OASDI, Medicare, Federal Income Tax, and

State Income Tax.

18) From the following data, calculate the estimate annual advance premium for workers’ compensation

insurance and record it in general journal form.

Department Estimated Payroll Rate per $100

Office $50,000 $0.24

Warehouse 40,000 1.40

Sales 75,000 0.90

19) Estimate the annual advance premium for workers’ compensation insurance, and record it in general

journal form using the following data:

Department Estimated Payroll Rate Per $100

Office $15,000 $ 0.24

Dietary 10,000 0.31

Nursing 135,000 3.00

20) Compute the total regular earnings. ________

21) Compute the total overtime earnings. ________

22) Compute the total gross earnings for the tutors. ________

23) Compute the total gross earnings for the office. _________

24) Compute the employees’ FICA-OASDI. ________

25) Compute the employees’ FICA-Medicare. ________

26) Compute the total federal income tax. ________

27) Compute the total state income tax. ________

28) Compute the total retirement. ________

29) Compute the total employers payroll tax. ________

30) Compute the total deductions. ________

31) Compute the net pay. ________

32) Prepare the general journal entry to record the payroll.

___________________________________________ _________ _________

33) Prepare the general journal entry to record the employer’s payroll tax expense.

___________________________________________ _________ _________

34) Prepare the general journal entry to record the payment of the employees.

___________________________________________ _________ _________

35) Prepare the general journal entry to record the payment to the Federal Treasury.

___________________________________________ _________ _________

36) Prepare the general journal entry to record the payment of the retirement fund withholdings.

___________________________________________ _________ _________

37)

Column 1

Column 2

Column 3

Column 4

Salary Expense

Column 1

Column 2

Column 3

Column 4

Salary Expense

expense

debit

income stmt

temporary

38)

Column 1

Column 2

Column 3

Column 4

Wage Expense

Column 1

Column 2

Column 3

Column 4

Wage Expense

expense

debit

income stmt

temporary

39)

Column 1

Column 2

Column 3

Column 4

Prepaid Workers

Comp Ins

Column 1

Column 2

Column 3

Column 4

Prepaid Workers

Comp. Ins

asset

debit

balance sheet

permanent

40)

Column 1

Column 2

Column 3

Column 4

Payroll Cash

Column 1

Column 2

Column 3

Column 4

Payroll Cash

asset

debit

balance sheet

permanent

41)

Column 1

Column 2

Column 3

Column 4

Payroll Tax

Expense

Column 1

Column 2

Column 3

Column 4

Payroll Tax

Expense

expense

debit

income state

temporary

42)

Column 1

Column 2

Column 3

Column 4

FUTA Payable

Column 1

Column 2

Column 3

Column 4

FUTA Payable

liability

credit

balance sheet

permanent

43)

Column 1

Column 2

Column 3

Column 4

SUTA Payable

Column 1

Column 2

Column 3

Column 4

SUTA Payable

liability

credit

balance sheet

permanent

44)

Column 1

Column 2

Column 3

Column 4

FICA-OASDI

Payable

Column 1

Column 2

Column 3

Column 4

Payable

liability

credit

balance sheet

permanent

45)

Column 1

Column 2

Column 3

Column 4

FICA-Medicare

Payable

Column 1

Column 2

Column 3

Column 4

Payable

liability

credit

balance sheet

permanent

8.4 Learning Objective 8-4

1) Which taxes are considered 941 taxes?

A) FICA, FUTA, and SUTA

B) FICA and SIT

C) FICA and FIT

D) None of these answers are correct.

2) Form 941 is filed:

A) monthly.

B) annually.

C) weekly.

D) quarterly.

3) 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 W-4

D) Form W-2

4) 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 SS-4

D) Form W-4B

5) 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

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

A) Form 944—Employer’s Annual Federal Tax Return.

B) Form 8109—Federal Tax Deposit Coupon.

C) Form 940—Employer’s Annual Federal Unemployment Tax Return.

D) Form W-2—Wage and Tax Statement.

7) The payment of FUTA would include:

A) a credit to Cash.

B) a credit to FUTA Payable.

C) a debit to FUTA Expense.

D) a credit to FUTA Expense.

8) 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.

9) What is the purpose of Form 8109?

A) Used by employers to report the amount of unemployment tax due for the year

B) A quarterly tax report indicating the amount of FICA (OASDI and Medicare) taxes owed

C) A coupon that is completed and sent along with payments of tax deposits relating to forms 940, 941, or

944

D) To allow employers who owe less than $2,500 to report their FICA (OASDI and Medicare) taxes owed

10) The form used to complete the annual federal unemployment report is Form 941.

11) A deposit must be made when filing the W-3 form.

12) Form 8109 is used to make deposits.

13) The 940 is filed annually.

14) Form 940 is used by businesses that employ workers in multiple states.

15) Form 941 is completed annually.

16) Employees must receive W-3s by January 31 of the following year.

8.5 Learning Objective 8-5

1) The employer’s annual Federal Unemployment Tax Return is:

A) Form 940.

B) Form 941.

C) Form W-4.

D) Form 8109.

2) How often is a 940 filed?

A) Monthly

B) Annually

C) Weekly

D) Quarterly

3) Which of the following does not apply to both a W-2 and 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.

4) Information to prepare W-2 forms can be obtained from individual employee records.

5) The W-2 is the Wage and Tax Statement.

6) The individual employee earnings for all employees in a company are summarized on the W-3 form.

7) The W-3 is also known as the Transmittal of Income and Tax Statement.

8) The W-3 is filed along with copies of the W-2 forms.