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College Accounting A Contemporary Approach 6th International Edition M. David Haddock, John Price, Michael Farina - Solutions

20. Certain transactions and procedures relating to federal and state unemployment taxes are given below for Latest Greatest, a retail store owned by John Marion. The firm’s address is 4560 LBJ Freeway, Dallas, TX 75232-6002. The firm’s phone number is 972-456-1201. The employer’s federal and
19. 1. On October 15, the firm made a deposit through EFTPS for the federal income tax withheld and the FICA and Medicare tax (both employees’ withholding and employer’s matching portion for September payrolls). Based on your computations in Problem 11.2B, record the issuance of the check in
18. A payroll summary for NDSquared, owned by Nikki Davis, for the quarter ending September 30, 20X1, appears below. The business made the following electronic deposits of payroll taxes:a. August 15 for July taxes.b. September 15 for August taxes.Date Wages Paid Total Earnings Social Security Tax
17. The payroll register of Trailer Rentals showed total employee earnings of $6,000 for the week ended April 8.INSTRUCTIONS 1. Compute the employer’s payroll taxes for the period. The tax rates are as follows:Social security 6.2 percent Medicare 1.45 FUTA 0.6 SUTA 5.4 2. Prepare a general
16. The following information relates to Ponte Manufacturing Company’s workers’ compensation insurance premiums for 20X1. On January 15, 20X1, the company estimated its premium for workers’compensation insurance for the year on the basis of that data.Work Classification Amount of Estimated
15. 1. Complete Form 940, the Employer’s Annual Federal Unemployment Tax Return.Assume that all wages have been paid and that all quarterly payments have been submitted to the state as required. The payroll information for 20X1 appears below. The federal tax deposits were submitted as follows: a
14. Certain transactions and procedures relating to federal and state unemployment taxes follow for Robin’s Nest LLC, a retail store owned by Robin Roberts. The firm’s address is 2007 Lovely Lane, Dallas, TX 75268-0967. The firm’s phone number is 972-456-1200. The employer’s federal and
13. 1. On July 15, the firm issued a check to deposit the federal income tax withheld and the FICA tax (both employee and employer shares for the third month [June]). Based on your computations in Problem 11.2A, record the issuance of the check in general journal form.Use journal page 24.2.
12. A payroll summary for Cortez Consulting Company, owned by Coni Cortez, for the quarter ending June 30, 20X1, appears below. The firm made the required tax deposits as follows:a. For April taxes, paid on May 15.b. For May taxes, paid on June 17.INSTRUCTIONS 1. Using the tax rates given below,
11. The payroll register of Commercial Cleaning Company showed total employee earnings of $5,000 for the payroll period ended August 14.INSTRUCTIONS 1. Compute the employer’s payroll taxes for the period. Use rates of 6.2 percent for the employer’s share of the social security tax, 1.45 percent
10. Medical Supplies estimates that its office employees will earn $175,000 next year and its factory employees will earn $600,000. The firm pays the following rates for workers’ compensation insurance:$0.60 per $100 of wages for the office employees and $7.50 per $100 of wages for the factory
9. On January 31, ACR Payroll prepared its Employer’s Annual Federal Unemployment Tax Return, Form 940. During the previous year, the business paid total wages of $420,000 to its 12 employees.Of this amount, $84,000 was subject to FUTA tax. Using a rate of 0.6 percent, determine the FUTA tax owed
8. On June 30, the State Unemployment Tax Payable account in the general ledger of Office Supplies showed a balance of $2,148. This represents the SUTA tax owed for the second quarter of the year.On July 31, the business issued a check to the state unemployment insurance fund for the amount due.
7. On April 30, Printing Needs prepared its state unemployment tax return for the first quarter of the year. The firm had taxable wages of $75,000. Because of a favorable experience rating, Quality pays SUTA tax at a rate of 1.4 percent. How much SUTA tax did the firm owe for the quarter?
6. On March 31, the Federal Unemployment Tax Payable account in the general ledger of The Article Company showed a balance of $1,507. This represents the FUTA tax owed for the first quarter of the year. On April 30, the firm deposited the amount owed in the First Bank. Record this transaction in
5. The Form W-2, Wage and Tax Statement, is due for each employee who works for a business.Please answer True (T) or False (F) for each of the following statements about the Form W-2.a. The Federal Form W-2 contains state income tax information, if applicable.b. Form W-2 indicates the number of
4. The quarterly Form 941 reports all but one of the following items. Please choose the item that cannot be found or determined from the Form 941.a. Number of employeesb. Wages in excess of the social security wage basec. Amount of FUTA tax dued. Total social security, Medicare, and federal income
3. At the end of the weekly payroll period on June 30, the payroll register of Cate’s Corner showed employee earnings of $60,000. Determine the firm’s payroll taxes for the period. Use a social security rate of 6.2 percent, Medicare rate of 1.45 percent, FUTA rate of 0.6 percent, and SUTA rate
2. After Copper Connection paid its employees on July 15 and recorded the corporation’s share of payroll taxes for the payroll paid that date, the firm’s general ledger showed a balance of $20,584 in the Social Security Tax Payable account, a balance of $4,814 in the Medicare Tax Payable
1. Given the following scenario, choose the best answer. At the end of the quarter, the business owed$2,000 in total payroll taxes. The amount due must be deposited:a. on the last business day of the quarter.b. on the last day of the quarter.c. on the day Form 941 for the quarter is due.d. on the
31. The Home Depot, Inc., reported the following data in its FY 2021 10-K (for the fiscal year ended January 30,2022):Analyze:1. What percentage of total current liabilities is made up of accrued salaries and related expenses at January 30, 2022?2. By what amount did accrued salaries and related
30. The Sweater Factory employs two managers for the factory. These managers work 12 hours per day at $16 per hour. After eight hours, they receive overtime pay. Management is trying to cut costs.They have decided to promote the managers to a salary position. The managers will be offered a daily
29. 1. Why should managers check the amount spent for overtime?2. The new controller for RMakEm, a manufacturing firm, has suggested to management that the business change from paying the factory employees in cash to paying them by check. What reasons would you offer to support this suggestion?3.
28. Several years ago, Sofia Cortz opened Tres Tacos, a restaurant specializing in homemade tacos. The restaurant was so successful that the company expanded, and now operates eight restaurants in the local area.Cortez tells you that when she first started, she handled all aspects of the business
27. Beach Vacations pays salaries and wages on the last day of each month. Payments made on December 31, 20X1, for amounts incurred during December are shown below. Cumulative amounts paid prior to the December 31 payroll for the persons named are also shown.a. Francis Fisher, president, gross
26. Daily Operations pays its employees monthly. Payments made by the company on November 30, 20X1, follow. Cumulative amounts paid to the persons named prior to the November 30 payroll are also given.1. Dave Orlando, president, gross monthly salary of $18,000; gross earnings prior to November 30,
25. Maria Merino operates Merino Consulting Services. She has four employees and pays them on an hourly basis. During the week ended November 12, 20X1, her employees worked the number of hours shown below. Information about their hourly rates, marital status, federal income tax withheld and
24. The four employees for AABest are paid on an hourly basis. During the week of December 25–31, 20X1, these employees worked the hours indicated. Information about their hourly rates, marital status, withholding allowances, and cumulative earnings prior to the current pay period also appears
23. Trey Rhoades works for Homebuilders, LLC. His pay rate is $14.00 per hour and he receives overtime pay at one and one-half times his regular hourly rate for any hours worked beyond 40 in a week. During the pay period ended December 31, 20X1, Trey worked 46 hours. Trey is married as he indicated
22. MSquared pays its employees monthly. Payments made by the company on October 31 follow.Cumulative amounts for the year paid to the persons prior to the October 31 payroll are also given.1. Tori Parker, president, gross monthly salary of $20,000; gross earnings prior to October 31,$160,000.2.
21. Alex Wilson operates On-Time Delivery Service. The company has four employees who are paid on an hourly basis. During the workweek beginning December 15 and ending December 21, 20X1, employees worked the number of hours shown below. Information about their hourly rates, marital status, federal
20. Low Country Goods has four employees and pays them on an hourly basis. During the week beginning June 24 and ending June 30, these employees worked the hours shown below. Information about hourly rates, marital status, federal income tax withheld and cumulative earnings prior to the current pay
19. Juanita Michaels works for DT Industries. Her pay rate is $15.00 per hour and she receives overtime pay at one and one-half times her regular hourly rate for any hours worked beyond 40 in a week.During the pay period that ended December 31, 20X1, Juanita worked 44 hours. She is
18. On July 31, the payroll register for Red Company showed the following totals for the month: gross earnings, $38,950; social security tax, $2,414.90; Medicare tax, $564.78; income tax, $5,842.00;and net amount due, $30,128.32. Of the total earnings, $30,500.00 was for sales salaries and$8,450.00
17. The Uniform Store has two office employees. A summary of their earnings and the related taxes withheld from their pay for the week ending June 7, 20X1, follows.1. Prepare the general journal entry to record the company’s payroll for the week. Use the account names given in this chapter. Use
16. Name the accounts used when the federal income tax withheld is submitted to US Treasury (debit and credit).
15. Using the earnings data given in Exercise 10.6, determine the amount of Medicare tax to be withheld from each employee’s gross pay for December. Assume a 1.45 percent Medicare tax rate and that all salaries and wages are subject to the tax.data from exercise 10.6 Employee No. December Salary
14. The monthly salaries for December and the year-to-date earnings of the employees of Lincoln Project Company as of November 30 follow.Employee No. December Salary Year-to-Date Earnings Through November 30 1 $ 9,000 $ 72,000 2 10,000 70,000 3 11,000 115,500 4 14,000 132,000 Determine the amount
13. During one week, four production employees of Pisgah Properties worked the hours shown below.All these employees receive overtime pay at one and one-half times their regular hourly rate for any hours worked beyond 40 in a week. Determine the regular earnings, overtime earnings, and gross
12. The hourly rates of four employees of Southern Flooring follow, along with the hours that these employees worked during one week. Determine the gross earnings of each employee.Employee No. Hourly Rate Hours Worked 1 $10.25 38 2 9.75 35 3 11.00 40 4 12.00 35
11. For last week, calculate the amount of social security and Medicare taxes to be withheld in each case.Employee Cumulative Earnings Year-to-Date Earnings Last Week Blue Bonnett $150,000.00 $3,000.00 Charlie Lee 100,000.00 2,000.00
10. Below are three employees of USWorks Inc. Hamilton and Adams are hourly employees while Washington is a salaried employee (minimum hours to be worked are 40 per week). Calculate gross pay for each person given the hours worked during the last week.Employee Hourly Rate Hours Worked John Hamilton
9. For each of the following hourly employees, calculate the overtime rate of pay as required by the Fair Labor Standards Act.Employee No. Regular Hourly Rate 1 $10.00 2 12.00 3 16.00
15. How does the salary basis differ from the hourly rate basis of paying employees?
14. What publication of the Internal Revenue Service provides information about the current federal income tax rates and the procedures that employers should use to withhold federal income tax from an employee’s earnings?
13. Briefly describe why the US federal income tax is described as a “pay as you go” tax.
12. What are the four bases for determining employee gross earnings?
11. How does the direct deposit method of paying employees operate?
10. What is the purpose of the social security tax?
9. What is the purpose of the Medicare tax?
8. How are earnings determined when employees are paid on the hourly rate basis?
7. Give two examples of common payroll fraud.
6. Does the employee bear any part of the SUTA tax? Explain.
5. How are the federal and state unemployment taxes related?
4. What is an exempt employee?
3. What aspects of employment are regulated by the Fair Labor Standards Act? What is another commonly used name for this act?
2. What factors affect how much federal income tax must be withheld from an employee’s earnings?
1. How does the Fair Labor Standards Act affect the wages paid by many firms? What types of firms are regulated by the act?
5. What is the purpose of workers’ compensation insurance?
4. How is the amount of social security tax to be withheld from an employee’s earnings determined?
3. From an accounting and internal control viewpoint, would it be preferable to pay employees by check or cash? Explain.
2. How does an independent contractor differ from an employee?
1. What is the purpose of the payroll register?
5. Payroll deductions are recorded in a separatea. asset account.b. expense account.c. liability account.d. revenue account.
4. Details related to all employees’ gross earnings, deductions, and net pay for a period are found in thea. payroll register.b. individual earnings record.c. general journal.d. cash payments journal.
3. Which of the following is recorded on an individual earnings record?a. Gross earnings each pay periodb. Federal income tax withheld each pay periodc. Social security tax withheld each pay periodd. All of the above
2. What accounts are affected when payroll checks are written?a. Cash is debited for gross earningsb. Cash is credited for net earningsc. Federal Income Tax is debitedd. Accounts Payable is credited
1. What is (are) a good reason(s) for using a payroll bank account for payroll that is separated from your operating bank account?a. Easier to audit payroll transactionsb. Easier to find an individual’s payroll transaction if check is lostc. Quicker bank reconciliation of payroll checking
5. Cas Walk worked 48 hours during the week ending November 17. Her regular rate is $9 per hour. Calculate her gross earnings for the week.a. $432b. $492c. $468d. $444
4. Which of the following affects the amount of Medicare tax to be withheld from an hourly rate employee’s pay?a. Medical insurance premiumb. Marital statusc. Withholding amounts claimed on Form W-4d. Hours worked resulting in higher gross pay
3. What does being classified an “exempt” employee mean?a. Level of dangerous work being performed by employeesb. Can take off work any time desiredc. Employee does not have to pay Medicare taxd. Generally speaking, not eligible for any overtime pay
2. Which factor(s) does not determine the amount of federal income tax to be withheld from an employee’s earnings?a. State where employee livesb. Number of dependents the employee claimsc. Marital statusd. The frequency of payroll payments
1. Which one of the following is not a required deduction from payroll required by federal law?a. FUTA taxb. Social security taxc. Federal income taxd. Medicare tax
5. Who pays the social security tax?a. Employee onlyb. Employer onlyc. Both employee and employerd. None of the above
4. The purpose of FUTA is to provide benefits fora. employees who become unemployed.b. employees who become injured while on the job.c. retired workers.d. disabled employees.
3. How are social security benefits financed?a. All social security benefits are from dollars withheld from employee pay.b. Employers totally fund social security.c. State governments fund social security.d. Employees and employers both fund social security.
2. How are unemployment insurance benefits financed?a. They are financed by taxing the employee and withholding from gross earnings.b. Employers pay the entire tax based on an amount determined by state and federal governments.c. The total cost of unemployment (FUTA and SUTA) is shared equally by
1. What is “time and a half”?a. 11:30 amb. 150% times employee base rate of payc. The FUTA rate of tax on quarterly earningsd. Means you owe federal income tax plus another 50%
8. You and four friends have decided to create a new service company called Unpacking for You. Your company unpacks for families once they have moved into a new house. Your business is primarily a cash business. Each family will pay you $100 for each room that is unpacked on the same day you finish
7. The following excerpt was taken from The Home Depot, Inc., 2021 Annual Report (for the fiscal year ended January 30, 2022):Analyze:1. What percentage of total assets is made up of cash and cash equivalents at January 30, 2022?2. Cash receipt and cash payment transactions affect the total value
6. Alec Rubino is the sole owner of Spectra Medical Instruments (Spectra), a small but successful distributor of medical supplies. Alec inherited the business from his father and is not really interested in running it on a day-to-day basis. Alec hired John Winter, CPA, to be the controller/general
5. How does management benefit when cash transactions are recorded quickly and efficiently?
4. Assume that you are the newly hired controller at Norton Company and that you have observed the following banking procedures in use at the firm. Would you change any of these procedures?Why or why not?a. A blank endorsement is made on all checks to be deposited.b. The checkbook is kept on the
3. 1. The new accountant for Asheville Hardware Center, a large retail store, found the following weaknesses in the firm’s cash-handling procedures. How would you explain to management why each of these procedures should be changed?a. No cash register proof is prepared at the end of each day. The
2. Steve Cardoso is the owner of Cardoso Contractors, a successful small construction company.He spends most of his time out of the office supervising work at various construction sites, leaving the operation of the office to the company’s office manager/bookkeeper, Georgia Alberts. Georgia makes
1. Anthony Arkanj is the owner and manager of The Auto Spa. The Auto Spa provides various car wash and car detailing services. The Auto Spa also sells snacks and gift items in its waiting area.The Auto Spa has one cash register, where all payments from customers are received. There is a $500 change
31. On December 1, 20X1, Stephen Alvarez, the accountant for Atlantic Appliances, downloaded the company’s November 30, 20X1, bank statement from the bank’s website. The balance shown on the bank statement was $31,734. The November 30, 20X1, balance in the Cash account in the general ledger was
30. In preparing the bank reconciliation at February 28, 20X1, for Big Guys Moving Corporation, the following errors were discovered in the firm’s records:a. The checkbook and the general journal indicated that Check 1301 dated February 18 was issued for $310 to pay for hauling expenses. However,
29. On July 31, 20X1, the balance in Midwest Appliance’s checkbook and Cash account was $9,418.59.The balance shown on the bank statement on the same date was $10,642.03.NOTESa. The following checks were issued but have not yet been paid by the bank: Check 533 for$261.75, Check 535 for $331.06,
28. On October 7, 20X1, Peter Chen, attorney-at-law, received his September bank statement from First Texas National Bank. Enclosed with the bank statement, which appears below, was a debit memorandum for $118 that covered an NSF check issued by Annette Cole, a credit customer. The firm’s
27. The Vintage Gift Shop, a retail business, started a $300 petty cash fund on September 4. Below are descriptions of the transactions to establish the petty cash fund, disburse petty cash during September, and replenish the petty cash fund on September 30.INSTRUCTIONS 1. Record the transaction on
26. The Just Because Gift Shop, a retail business, started business on April 25, 20X1. It keeps a $225 change fund in its cash register. The cash receipts for the period from April 25 to April 30, 20X1, are below.INSTRUCTIONS 1. Open the general ledger account for Cash Short or Over, account number
25. On August 1, 20X1, Sofia Marciano, the accountant for European Exports, downloaded the company’s July 31, 20X1, bank statement from the bank’s website. The balance shown on the bank statement was $29,810. The July 31, 20X1, balance in the Cash account in the general ledger was $14,687.Sofia
24. During the bank reconciliation process at Batiste & French Consulting, LLP, on May 2, 20X1, the following two errors were discovered in the firm’s records.a. The checkbook and the general journal indicated that Check 2206, dated April 17, was issued for $585 to make a cash purchase of
23. On August 31, 20X1, the balance in the checkbook and the Cash account of the Dry Creek Bed and Breakfast was $12,831. The balance shown on the bank statement on the same date was $13,667.NOTESa. The firm’s records indicate that a $1,700 deposit dated August 30 and a $701 deposit dated August
22. On May 2, 20X1, HPF Vacations received its April bank statement from First City Bank and Trust.Enclosed with the bank statement, which appears below, was a debit memorandum for $160 that covered an NSF check issued by Doris Fisher, a credit customer. The firm’s checkbook contained the
21. Fiona’s Florals, a retail business, started a $400 petty cash fund on June 1. Below are descriptions of the transactions to establish the petty cash fund, disburse petty cash during June, and replenish the petty cash fund on June 30.INSTRUCTIONS 1. Record the transaction to establish the
20. Christy’s Cupcakes, a retail business, started business on June 25, 20X1. It keeps a $300 change fund in its cash register. The cash receipts for the period from June 25 to June 30, 20X1, are below.INSTRUCTIONS 1. Open the general ledger account for Cash Short or Over, account number 620.2.
19. In preparing the April 30 bank reconciliation process for Fontes & Faria Consulting, LLP, the firm’s accountant noted errors in the accounting records:1. The checkbook and general journal indicated that Check 2606, dated April 18, was issued for$475 to pay a utility bill. However, the actual
18. The accountant for Rizzi and Tsang, Attorneys at Law, prepared the firm’s May 31, 20X1, bank reconciliation that appears below.Prepare the necessary journal entries as of May 31, 20X1. Use 21 as the journal page number. Balance on bank statement Additions: Deposit of May 31 in transit

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