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1. The total assets amount to $26,000 and the total liabilities amount to $18,000. The amount of the owner’s equity is ANSWER: $8,000
2. A self-employment tax is required of an individual who owns his or her own business and makes ANSWER: $400 OR MORE
3. Joel Trump is paid one and one-half times the regular hourly rate for all hours worked in excess of 40 hours per week and double time for work on Sunday. Trump’s regular rate is $8 per hour. During the week ended October 10, he worked 9 hours each day from Monday through Friday, 6 hours on Saturday, and 4 hours on Sunday. Trump’s total earnings for the week ended October 10 are ANSWER: $516
4. The date on which an employer must pay Social Security and Medicare taxes is ANSWER: Dependent on amount of taxes.
5. Compensation normally expressed in biweekly, monthly, or annual terms for managerial or administrative services is called ANSWER: Salary
6. Melissa Taylor has gross earnings of $425 and withholdings of $26.35 for Social Security tax, $6.16 for Medicare tax, and $35 for federal income tax. Her employer pays $26.35 for Social Security tax, $6.16 for Medicare tax, $3 for FUTA tax, and $9 for SUTA tax. The total cost of Melissa to her employer is ANSWER: $469,51
7. Capital at the beginning of the month amounted to $4,000; net income for the month amounted to $1,000; and withdrawals for personal use during the month amounted to $2,000. Capital at the end of the month is ANSWER: $3,000
8. The journal entry to close the drawing account includes ANSWER: Debit owners, capital, credit drawing
9. A key source of information for computing employer payroll taxes is the ANSWER: Payroll register.
10. An Employer Identification Number (EIN) is obtained by the employer from the ANSWER: IRS
11. The amount reported in the Balance Sheet columns of the work sheet for the owner’s capital represents the ANSWER: The beginning balance+investments
12. The outputs from a manual or an electronic payroll accounting system include all of the following EXCEPT ANSWER: Time Cards.
13. (Appendix) A company receives cash from a bank loan. This activity is classified as ANSWER: Financing activity.
14. The cost of workers’ compensation insurance for the employer depends on all of the following EXCEPT ANSWER: FICA, FUTA, SUTA
15. The rules by which employers must deposit Social Security and Medicare taxes can be found in the ANSWER: Circular E employer’s tax guides.
16. The payroll register for the week ended May 28 for J & D United indicates gross earnings of $4,000 and total deductions of $1,200. The total of all the credit entries for the payroll for the week ending May 28 would be ANSWER: $4000 debit
17. Changes in owner’s equity that result from investments or withdrawals of assets by the owner are included in the ANSWER: Statement of owner’s equity
18. Sandra Wilson is paid one and one-half times the regular hourly rate for all hours worked in excess of 40 hours per week and double time for work on Sunday. Wilson’s regular rate is $12 per hour. During the week ended July 3, she worked 9 hours each day from Monday through Friday, 6 hours on Saturday, and 4 hours on Sunday. Wilson’s overtime earnings for the week ended July 3 are ANSWER: $245
19. A multi-column form used to assemble, compute, and summarize data for all employees at the end of the payroll period is a(n) ANSWER: Payroll register
20. Jillian Diaz receives a regular salary of $1,500 a month and is entitled to overtime pay at the rate of one and one-half times the regular hourly rate for any time worked in excess of 40 hours per week. Diaz’s overtime pay rate is ANSWER: $12.98
21. After the accounts are closed and the journal entries have been posted, which of the following accounts would have a balance? ANSWER: Supplies
22. The account that is credited with amounts withheld from an employee’s earnings for any pension plan contribution is ANSWER: pension plans deductions payable
23. To journalize the employer’s payroll taxes, we need to credit all of the following accounts EXCEPT ANSWER: payroll taxes expense
24. After estimating its payroll for the year, an employer usually pays workers’ compensation insurance ANSWER: At the beginning of the year
25. The account that is credited for the Medicare tax withheld from employee’s earnings and the Medicare tax imposed on the employer is ANSWER: Medicare tax payable
26. A form of balance sheet that lists the liabilities and the owner’s equity sections below the assets section is called the ANSWER: Report form.
27. Cameron Tiller is paid one and one-half times the regular hourly rate for all hours worked in excess of 40 hours per week and double time for work on Sunday. Tiller’s regular rate is $12 per hour. During the week ended March 15, he worked 9 hours each day from Monday through Friday, 6 hours on Saturday, and 4 hours on Sunday. Tiller’s total regular earnings for the week ended March 15 are ANSWER: $480
28. Any person who agrees to perform a service for a fee and is not subject to the control of those for whom the service is performed is called a(n) ANSWER: Independent contract
29. What is the purpose of the post-closing trial balance? ANSWER: To prove that debit and credit are equal.
30. The account that is debited for the total amount of the gross earnings of all employees for each pay period is ANSWER: Wages, Salaries, expenses
31. When a single-check for payroll is prepared and deposited into a special payroll bank account, which of the following entries is made to record the deposit? ANSWER: Debit payroll, Credit cash
32. After the closing entries are journalized and posted, which of the following accounts would NOT have a balance? ANSWER: Service revenue.
33. When all taxes have been paid, the Social Security Tax Payable account will have ANSWER: Zero
34. Denise Cruz receives a regular salary of $900 a month and is entitled to overtime pay at the rate of one and one-half times the regular hourly rate for any time worked in excess of 40 hours per week. Cruz’s overtime rate of pay is ANSWER: $7.79
35. The payroll register for the week ended February 14 for Luxury Homes Construction Company indicates gross earnings of $4,000 and total deductions of $1,200. The entry for the Wages and Salaries Expense ending February 14 would be a ANSWER: 4,000 debit
36. Employers who have $100,000 or more due in federal income tax withholding and Social Security and Medicare taxes on any day during the current quarter should journalize the debt and pay at the end of the ANSWER: Next banking day
37. What is the correct sequence for closing the temporary accounts? ANSWER: Revenue, Expenses, Income, Drawing