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Exam 6: Analyzing and Journalizing Payroll

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Question 1

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The payroll taxes incurred by an employer are FICA, FUTA, and SUTA.

A) True
B) False

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Question 2

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The garnishment that takes priority over all others is:

A) a federal tax levy.
B) a government student loan.
C) a creditor garnishment.
D) an administrative wage garnishment.
E) a child support order.

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

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Question 3

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Tax withholdings from employees' pays reduce the amount of the debit to Salary Expense in the payroll entry.

Which of these accounts shows the total gross earnings that the employer incurs as an expense each payday?

The entry made at the end of the accounting period to record wages incurred but unpaid is:

The wage and salaries expense account is an operating expense account debited for total net pay each payroll period.

Since vacation time is paid when used, there is no need to accrue this time in a liability account at the end of each accounting period.

A debit to the employees FIT payable account removes the liability for the amount of federal income taxes withheld from employees' wages.

Posting to the general ledger for payroll entries is done only at the end of each calendar year.

In the adjusting entry to accrue wages at the end of the accounting period, there is no need to credit any tax withholding accounts.

In recording the monthly adjusting entry for accrued wages at the end of the accounting period, the amount of the adjustment would usually be determined by:

The FUTA tax part of the payroll tax entry is recorded at the net amount (0.6%) of the taxable payroll.

An employer will use the payroll register to keep track of an employee's accumulated wages.

When the federal tax deposit is made, the employees' and employer's shares of FICA taxes are paid along with the employees' FIT taxes withheld.

The entry to record the employer's payroll taxes usually includes credits to the liability accounts for FICA (OASDI and HI), FUTA, and SUTA taxes.

Companies usually provide a separate column in the payroll register to record the employer's payroll taxes.

At the time that the entry is made to record the employer's payroll taxes, the SUTA tax is recorded at the net amount (0.6%).

The adjusting entry to record the accrued vacation pay at the end of an accounting period includes credits to the tax withholding liability accounts.

In order to prepare Forms W-2, an employer would utilize the employee's earnings record.

If employees must contribute to the state unemployment fund, this deduction should be shown in the payroll tax entry.