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The amount of federal income taxes withheld from an employee's paycheck is determined by:


A) The employee's annual earnings rate and number of withholding allowances.
B) The employer's merit rating.
C) The employee's annual earnings rate and merit rating.
D) Multiplying gross pay by 6.2%.
E) The employee's credit rating.

F) C) and D)
G) A) and E)

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A company's payroll for the week ended May 15 included earned salaries of $20,000.All of that week's pay is subject to FICA Social Security taxes of 6.2% and Medicare taxes of 1.45%.In addition,the company withholds the following amounts for this weekly pay period: $900 for medical insurance; $3,400 for federal income taxes; and $180 for union dues. a.Prepare the general journal entry to accrue the payroll. b.The company is subject to state unemployment taxes at the rate of 2% and federal unemployment taxes at the rate of 0.8%.By May 15,some employees had earned over $7,000,so only $9,000 of the $20,000 weekly gross pay was subject to unemployment tax.Prepare the general journal entry to accrue the employer's payroll tax expense.

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a.
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An employee earned $3,450 wages for the current period.Calculate the total and individual amounts to be withheld for Social Security (6.2%),Medicare (1.45%)and federal income tax (15%)assuming the entire employee's pay is subject to FICA taxes.

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Mission Company has three employees:  Gross Pay through July  Gross Pay for August  Smith $3,200$1,000 Cain 25,8003,500 Clark 94,60013,100\begin{array}{lrr}&\text { Gross Pay through July }&\text { Gross Pay for August }\\\text { Smith } & \$ 3,200 & \$ 1,000 \\ \text { Cain } & 25,800 & 3,500 \\ \text { Clark } & 94,600 & 13,100\end{array}  The company is subject to the following taxes: \text { The company is subject to the following taxes: }  Tax  Rate  Applied to  FICA-Social Security 6.20% First $106,800 FICA-Medicare 1.45 All grosspay  FUTA .80 First $7,000 SUTA 5.40 First $7,000\begin{array} { l c l } \text { Tax } & \text { Rate } & \text { Applied to } \\ \text { FICA-Social Security } & \mathbf { 6 . 2 0 \% } & \text { First } \$ 106,800 \\ \text { FICA-Medicare } & 1.45 & \text { All grosspay } \\ \text { FUTA } & \mathbf { .8 0 } & \text { First } \$ 7,000 \\ \text { SUTA } & 5.40 & \text { First } \$ 7,000 \end{array} What are Mission Company's total August payroll taxes for Clark?


A) $ 946.35
B) $1,002.15
C) $1,814.35
D) $6,234.75
E) $812.20

F) C) and E)
G) B) and D)

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The employer should record payroll deductions as:


A) Employee receivables
B) Payroll taxes
C) Current liabilities
D) Wages payable
E) Employee payables

F) B) and D)
G) C) and D)

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Vacation benefits are a form of estimated liabilities for an employer.

A) True
B) False

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A company's income before interest expense and taxes is $250,000 and its interest expense is $100,000.Its times interest earned ratio is equal to .4.

A) True
B) False

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_________________ are probable future payments of assets or services that a company is currently obligated to make as a result of past transactions or events.

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The Orlando Magic received $6 million cash in advance season ticket sales.Prior to the beginning of the basketball season,these sales are recorded as a credit to unearned season ticket revenue.

A) True
B) False

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Match the following definitions with the appropriate terms

Premises
Additional compensation paid to or on behalf of employees, such as premiums for medical insurance and contributions to pension plans.
A record for a pay period that shows the pay period dates, regular and overtime hours worked, gross pay, net pay, and deductions.
Total compensation earned by an employee.
Income before interest expense and income taxes divided by interest expense.
A written promise to pay a specified amount on a definite future date within one year or the company's operating cycle, whichever is longer.
A bank authorized to accept deposits of amounts payable to the federal government, including payroll taxes.
A seller's obligation to repair or replace a product or service that fails to perform as expected within a specified period.
A special bank account used solely for paying employees.
Obligations due within one year or the company's operating cycle, whichever is longer.
Payments of income taxes that are not due until future years because of temporary differences between GAAP and tax accounting rules.
Responses
Payroll register
Current liabilities
Payroll bank account
Warranty
Gross pay
Employee benefits
Deferred income tax liability
Federal depository bank
Times interest earned
Short-term note payable

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Additional compensation paid to or on behalf of employees, such as premiums for medical insurance and contributions to pension plans.
A record for a pay period that shows the pay period dates, regular and overtime hours worked, gross pay, net pay, and deductions.
Total compensation earned by an employee.
Income before interest expense and income taxes divided by interest expense.
A written promise to pay a specified amount on a definite future date within one year or the company's operating cycle, whichever is longer.
A bank authorized to accept deposits of amounts payable to the federal government, including payroll taxes.
A seller's obligation to repair or replace a product or service that fails to perform as expected within a specified period.
A special bank account used solely for paying employees.
Obligations due within one year or the company's operating cycle, whichever is longer.
Payments of income taxes that are not due until future years because of temporary differences between GAAP and tax accounting rules.

A company has two employees whose total January salaries totaled $8,000.The federal income tax rate for both employees is 15%.The FICA Social Security tax is 6.2% and the FICA Medicare tax is 1.45%.Calculate the amount of employee taxes withheld and prepare the company's journal entry to accrue the January salaries expense and withholding of January taxes.

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None...

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