2018
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PAYROLL
ACCOUNTING
Bieg/Toland
TEST 4
Student INSTRUCTOR’S COPY
Chapter 4 Date
SCORING RECORD
Section Total Points Deductions Score
A 30
B 20
C 50
Total 100
Section A—DIRECTIONS: Each of the following statements is either true or false. Unless directed otherwise
b
y your instructor, indicate your choice in the Answers column by writing “T” for a true answer or “F” for a false
answer. (1½ points for each correct answer)
For
Answers Scoring
2.
Not-for-profit corporations that are exempt from federal income taxes do not withhold federal in-
5.
Employees receiving over $1 million in supplemental wages for the year will have a 39.6% with-
6.
Employees’ payroll deductions into their 401(k) plans are generally made on a pretax basis and
7.
A worker with three employers should claim at least one withholding allowance with each
9.
Withholding allowance certificates must be retained by employers for as long as the certificates
10. An employee filed a Form W-4 and claimed 22 withholding allowances. The employer should
11. Unmarried persons are distinguished from married persons under both the percentage method
12. Vacation pay is to be paid at the same time as a regular wage payment. In this case, the vacation
13. In the IRA form of a simple retirement account, employers can contribute as much as they want
15. If an employee who left the company requests a W-2 before the end of the year, it must be
16. The maximum contribution that an employee (age 40) can make into a 401(k) plan that is not
17. Form W-3 is filed with the Social Security Administration by employers as a transmittal of the
ATS–8 Chapter 4/Achievement Test Solutions
SECTION A (continued)
20. Contributions made by the employer into employees’ health savings accounts are excluded from
Section B—DIRECTIONS: Complete each of the following sentences by writing in the Answers column the
letter of the word or words that correctly completes each statement. (2 points for each correct answer)
For
Answers Scoring
1. Which of the following fringe benefits is taxable? (A) membership in a country club, (B) use of on-
premise athletic facility, (C) job-placement assistance, (D) qualified employee discounts, (E) re-
2. All of the following persons are classified as employees under the federal income tax withholding
law with the exception of (A) a first-line supervisor, (B) the president of a corporation, (C) a
3. If an employee files an amended W-4, the employer must make the W-4 effective no later than
the (A) next payday, (B) start of the first payroll period ending on or after the 30th day from the
4. Ron Case, married with four dependents, failed to complete and file Form W-4 with his employer.
The employer should (A) withhold federal income taxes as if Case were single and claimed
six allowances, (B) withhold federal income taxes as if Case were married and claimed no
allowances, (C) withhold federal income taxes at a rate of 25% of Case’s wages, (D) refuse to pay
5. Employers must submit Forms W-4 to the IRS for (A) all Forms W-4, (B) those claiming more
than 10 allowances, (C) all Forms W-4 claiming exemption, (D) those requested in writing by
6. The withholding on vacation wage payments is (A) a flat 15%, (B) based on the total amount of
the wage payment plus the vacation pay, (C) taxed as though it were a regular payment for the
7. A publisher is preparing information returns to report the royalties paid to authors (nonemployees)
during the prior calendar year. The proper information return to be completed is (A) Form W-2,
8. Which of the following forms is not completed by the employer? (A) W-2, (B) W-3, (C) Form
9. Both the percentage method and the wage-bracket method of withholding have each of the
following characteristics except (A) unmarried persons are distinguished from married persons,
(B) a table of allowances values is used, (C) employees are given the full benefit of the allowances
they claim, (D) tables and wage-bracket charts are used to determine the amount withheld,
10. Wolf Company is giving a net bonus check of $500 to all of its employees. If each of the payments
are subject to FIT (25% supplemental rate) and FICA taxes, but no state taxes, the gross amount of
*⎟
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−−− 0145.0062.025.01
500$
Section C—DIRECTIONS: Complete the following payroll register for employees of Corby Company for the week ended March 2. Taxable earnings should be
computed on the basis of a 40-hour week with overtime earnings being paid at time and one-half for all hours over 40 each workweek (no overtime for salaried
employees). Note: Carry each overtime hourly rate out to 3 decimal places and then round off to 2 decimal places. All employees’ wages are subject to the OASDI
tax of 6.2% and the HI tax of 1.45%. The supplemental HI rate of 0.9% is not applicable.
Use the partial wage-bracket tables provided to determine the amount of federal income tax to be withheld. For the salaried employees (#32 and #10), use the
percentage method table. All workers are employed in a state that imposes a 2% income tax on the gross wages earned by each worker. (1 point for each correct
answer—exclude totals row)
PAYROLL REGISTER
FOR WEEK ENDING
20–
March 2
EMPLOYEE’S
NO.
CLAIMED
TIME RECORD REGULAR EARNINGS OVERTIME EARNINGS DEDUCTIONS NET PAY
EMPLOYEE’S
NO.
MONDAY
TUESDAY
THURSDAY
FRIDAY
SATURDAY
NO. HOURS
(REGULAR)
RATE PER
HOUR
AMOUNT
NO.
RATE PER
HOUR
AMOUNT TOTAL
EARNINGS
FICA TAXES
OASDI HI
FEDERAL
INCOME
TAX
STATE
INCOME
TAX
CHECK
NO. AMOUNT
$598.10 × 0.25 = $149.53 + $100.50 = $250.03
Chapter 4/Achievement Test Solutions ATS–9
ATS–10 Chapter 4/Achievement Test Solutions
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