9-1

Chapter 9, TEST 9A

Name ______

Date ______

SCORING RECORD

Section / Total Possible / Deductions / Student
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. (2 points for each correct answer)

For

Answers Scoring

  1. The employer must pay to the IRS the amount owed

for Social Security and Medicare by the business

plus the amount withheld for the employee. ______

  1. Individuals who own and run their own business are

considered employees. ______

  1. Small businesses often have an outside company

handle payroll because of the complexity of payroll

rules. ______

  1. Self-employment income is the net income of a

business or trade run by a partnership. ______

  1. Under the Federal Unemployment Tax Act (FUTA),

a payroll tax is levied on employers and employees

for the purpose of financing the administration cost

of the state unemployment compensation program. ______

  1. One half of the self employment tax is a personal

expense of the owner of the business. ______

  1. The Social Security, Medicare, FUTA, and SUTA tax

payable accounts are credited when the taxes are

actually paid to the IRS. ______

  1. The Social Security, Medicare, FUTA, and SUTA tax

payable accounts normally have debit balances. ______

  1. The more a business owes in Federal Income Tax

withholding and Social Security and Medicare tax,

the less time it has to pay it. ______

  1. The due date for payment of taxes is not the same

date for all employers. ______

  1. Deposits of Social Security and Medicare taxes

may be made on Form W-4. ______

  1. Each employer must have an Employer Identification

Number (EIN) on all tax information. ______

13. SUTA tax rates vary among states. ______

14. Workers' compensation provides insurance for

employees who suffer a job-related illness or

injury. ______

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

employee with a wage and tax statement Form W-2. ______

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. The following is a tax paid by both the employee

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

(C) Social Security tax; (D) SUTA tax; (E) A & C. ______

  1. A self-employment tax is a contribution to the:

(A)Social Security and Medicare programs; (B)FUTA

programs; (C) SUTA programs; (D) charities of

the individual owner's choice; (E) state

government. ______

  1. When all taxes have been paid, the liability

account will have: (A) a credit balance; (B) a

debit balance; (C) a zero balance; (D) no balance;

(E) a new balance showing all taxes that have

been paid since the employee started work. ______

  1. The rules by which employers must deposit Social

Security and Medicare taxes can be found in:

(A) the Circular E-Employer's Tax Guide; (B) the

IRS Tax Guide; (C) The Federal Reserve Bank Tax

Guide; (D) the employer's handbook; (E) none of

these. ______

  1. 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. ______

  1. Tracy Adkins has gross earnings of $400 and

withholdings of $28.64 for Social Security tax,

$3.36 for Medicare tax, and $55 for federal

income tax. Her employer pays $28.64 for Social

Security tax, $3.36 for Medicare tax, $2 for FUTA

tax, and $7 for SUTA tax. The total cost of

Adkins to her employer is: (A) $528; (B) $473;

(C) $441; (D) $390; (E) none of these. ______

  1. The date on which an employer must pay Social

Security and Medicare taxes is: (A) January 1

of each year; (B) June 30 of each year;

(C)December 30 of each year; (D) depends on the

amount of the taxes; (E) determined for each

business by the IRS agents. ______

  1. An Employer Identification Number (EIN) is

obtained by the employer from the: (A) CIA;

(B) Internal Revenue Service; (C) nearest Federal

Reserve Bank; (D) any bank; (E) state

unemployment office. ______

  1. The adjustment to journalize an additional

premium due at the end of the year for worker's

compensation insurance (WCI) is: (A) debit WCI

Expense and credit Cash; (B) debit WCI Expense

and credit Compensation Refund; (C) debit WCI

Expense and credit WCI Payable; (D) debit WCI

Insurance Refund and credit WCI Payable; (E) debit

Insurance Payable and credit WCI Payable. ______

  1. 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. ______

Section C

DIRECTIONS: (10 points total)

Philip’s Car Wash estimated payroll for the year at $100,000. 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 $90,000. 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.

JOURNAL / PAGE
DATE / DESCRIPTION / POST REF / DEBIT / CREDIT
1
2
3
4
5
6

Section D

Directions: (30 points total)

Information from the payroll register of Hoffert Company for the week ended August 8, 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 $87,000 of earnings. Medicare is 1.45% on gross earnings.

  1. Complete the chart below and calculate the employer’s payroll taxes.

Employee
Name / Cumulative Pay Before
Current Earnings / Current
Weekly
Earnings / Taxable
Earnings
Unemployment / Taxable
Earnings
Social
Security
A. Block / 90,000 / 3,000
T. Forto / 6,400 / 1,500
B. Kind / 6,900 / 700
P. Sinapod / 86,600 / 2,800
C. Ulater / 68,000 / 4,000
Totals / 12,000

2.Prepare the journal entry to record the employers payroll taxes for the week ended August 8, 20--.