Book 2 - Chapter 29

Multiple Choice
1.	d	(40 hours × $20 = $800) + (6 hours × $30 = $180)
2.	d
3.	a	Personnel activities include authorizing employees, terminating employees, setting pay rates, and setting withholding allowances. The departments that calculate the payroll or distribute checks should never do this.
4.	c	Check distribution should be separated from personnel, payroll, and direct supervisory functions.
5.	d	Both FUTA and SUTA are only employer expenses, and are never paid by employees.
6.	b	Joe claims one exemption for himself, one for his wife, and one for each child. However, he may claim more exemptions if he has other losses on his income tax return that create constant refunds.
7.	c	This is either “reasonably possible” or “remote,” but unlikely to be “probable.”
8.	b	Payroll tax is only calculated on the amount of the wage base for the year. At the point at which the next dollar of gross pay exceeds the wage base limit, no further tax is due.
9.	c
10.	c
11.	d	Regarding choice c, payroll taxes do not become a liability until the payroll is paid, so there is no withholding liability to record.
12.	c	Salaries and Wages expense should always be accrued. It is also technically good practice to accrue employer payroll taxes because they are expenses that are created as wage expense is created, even though the obligation for payment does not exist until the payroll is paid. Benefit expenses should also be accrued.
13.	d	“Consultant” refers to an independent business, not an employee.
14.	a
15.	c
16.	b	$180/5 = $36 overtime rate; $36/1.5 = $24 regular pay rate; 40 hours × $24 = $960.
17.	d	The OASDI part is 6.2% on an annual maximum of $94,000. The Medicare part is 1.45% on all gross wages. Therefore, the total for the year is ($94,000 × .062) + ($105,000 × .0145) = $7,350.50.
18.	c	The supervisor potentially could submit time cards for fictitious employees and cash the checks.

Learning Goal 29

SOLUTIONS

Learning Goal 29: Record, Report, and Control Current Liabilities and Payroll

Home

Home || Book Publications || Professor’s Office || Student Info & Resources || Useful Links

Worthy & James Publishing is a provider of basic accounting books covering fundamental accounting principles, business accounting, and business math. Topics in financial accounting and business accounting covered include the balance sheet, the income statement, financial ratios, and bank reconciliation.