Payroll Accounting 2018 28th Edition

Bieg Solutions Manual

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 2018 TEST 5

PAYROLL
e d i t i o n
Student
Chapter 5 Date
SCORING RECORD

ACCOUNTING
Section Total Points Deductions Score
A 40
B 30
C 30

Bieg/Toland Total 100

Section A—DIRECTIONS: Each of the following statements is either true or false. Unless directed otherwise by
your instructor, indicate your choice in the Answers column by writing “T” for a true answer or “F” for a false answer.
(2 points for each correct answer)
For
Answers Scoring
1. The federal unemployment tax is imposed on employers, and thus, is not deducted from
employees’ wages.............................................................................................................................. 1.
2. Educational assistance payments to workers are considered nontaxable wages for unemployment
purposes. ............................................................................................................................................ 2.
3. For the purpose of the FUTA tax, members of partnerships are considered employees. .................. 3.
4. FUTA coverage does not include service of any nature performed outside the United States by a
citizen of the United States for an American employer. .................................................................... 4.
5. The location of the employee’s residence is the primary factor to be considered in determining
coverage of an employee who works in more than one state............................................................. 5.
6. A bonus paid as remuneration for services is not considered taxable wages for unemployment tax
purposes even if the employee has not exceeded the taxable wage base. .......................................... 6.
7. In the case of an employee who changes jobs during the year, only the first employer must pay
FUTA tax on that employee’s earnings. ............................................................................................ 7.
8. The maximum credit that can be applied to the FUTA tax because of SUTA contributions is 5.4%. 8.
9. If an employer pays a SUTA tax of 2.0%, the total credit that can be claimed against the FUTA
tax is 2.0%. ........................................................................................................................................ 9.
10. E-pay or a major debit or credit card can be used to pay the required FUTA deposits during the year. .... 10.
11. Employer contributions made to employees’ 401(k) plans that are included in total payments on
Form 940 are also then deducted as exempt payments. ..................................................................... 11.
12. The payments of FUTA taxes are included with the payments of FICA and FIT taxes and are
paid as one lump sum. ....................................................................................................................... 12.
13. If an employer’s FUTA tax liability for the 1st quarter is $935, no payment is required for the 1st
quarter................................................................................................................................................ 13.
14. If a business has ceased operations during the year, as long as the payments of the FUTA taxes
have been made, a Form 940 does not need to be completed for that year........................................ 14.
15. If all wages were excluded from SUTA taxes, but were subject to FUTA, the FUTA tax rate
would be 6.0%. .................................................................................................................................. 15.
16. In certain circumstances, a FUTA tax payment can be remitted with Form 940. .............................. 16.
17. All of the states allow employers to make voluntary contributions into their state unemployment
fund so that a lower tax contribution rate would be assigned. ........................................................... 17.
18. Employers have to pay a FUTA tax on only the first $3,500 of each part-time employee’s
earnings (1/2 of the full $7,000 limit). ............................................................................................... 18.
19. Only employers who paid state unemployment taxes in more than one state or paid wages in a
credit reduction state are required to complete Schedule A of Form 940. ......................................... 19.
20. Form 940 can also be used to file an amended return........................................................................ 20.

AT–11
© 2018 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
AT–12 Chapter 5/Achievement Test

Section B—DIRECTIONS: Determine the correct answer for each of the following problems. (5 points for
each correct answer)
For
Answers Scoring
1. Truson Company paid a 4% SUTA tax on taxable wages of $108,500. The taxable wages
under FUTA were $89,400. What was the net FUTA tax of Truson Company? ............... $ 1.
2. Jason Jeffries earned $10,200 while working for Brown Company. The company’s
SUTA tax rate is 2.9% of the first $7,000 of each employee’s earnings. Compute the
total unemployment taxes (SUTA and FUTA) that Brown Company should pay on
Jeffries’ earnings. ............................................................................................................... $ 2.
3. Caruso Company’s SUTA rate for next year is 2.9% because its reserve ratio falls in its
state’s 8% to less than 10% category [(contributions – benefits paid) ÷ average payroll =
$93,500 ÷ $971,500 = 9.62%].
If the next category (10% to less than 12%) would give Caruso a lower tax rate of 2.3%,
what would be the amount of the voluntary contribution needed to get Caruso to that
next category? .................................................................................................................... $ 3.
4. Fred Stone is an employee of Henrock Company. During the first part of the year, Stone
earned $4,340 while working in State Q. For the remainder of the year, the company
transferred him to State S where he earned $27,000. Henrock Company’s tax rate in State
Q is 4.6%, and in State S, 4.0% on the first $7,000.
If reciprocal arrangements exist between the two states, determine the SUTA tax that
the company paid on Stone’s earnings in State S............................................................... $ 4.
5. Leinart Company had taxable wages (SUTA and FUTA) totaling $175,000. During the
year, the company was late in paying its state contributions of 3.6% and is, therefore,
subject to the FUTA credit reduction. Determine the amount of net FUTA tax. ............... $ 5.
6. Englesbe Company’s FUTA tax liability was $289.50 FUTA tax for the 1st quarter;
$129.80 for the 2nd quarter; $123.00 for the 3rd quarter; $16.00 for the 4th quarter.
The company’s first required payment of FUTA taxes is .................................................. $ 6.

Section C—DIRECTIONS: The information given below was taken from the payroll records of Clegg Com-
pany (Oregon employer) for 20--. Use the information to complete the partially illustrated Form 940 shown below.
Assume that all taxes were deposited timely. (2½ points for each correct answer)

Total remuneration:
$155,900
Included in the total re-
muneration is $3,000 of
employer’s contributions
to the employees’ 401(k)
plans.
Remuneration in
excess of $7,000:
$66,670
Taxable remuneration
by quarters:
1st quarter ........ $43,700
2nd quarter ....... $24,940
3rd quarter ........ $14,360
4th quarter ........ $ 3,230

Source: Internal Revenue Service.

© 2018 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.