smch08

ANSWERS TO DISCUSSION QUESTIONS

1. Payroll FICA-Social Security employer matchestax = FICA-Medicare employee amountsexpense SUTA

FUTA

2. A credit for the state unemployment program is applied against FUTA rate. The maximum amount ofcredit is 5.4 percent.

3. A state will assign each business a particular percentage for state unemployment taxes based on theemployment record of the business. The rate will vary depending on the amount paid to formeremployees of the business due to layoffs, etc.

4. The employer is classified as a monthly or semi-weekly depositor depending on how much theemployer has paid in Form 941 taxes during a time period known as the look-back period.

5. Form 8109 is a coupon for tax deposits.6. Quarterly.7. Correct. When the amount on line 13 is $2,500 or more, it must match the amount found on line 17 (d).8. Bill is entitled to his W-2 within 30 days after his final day of employment with the company.9. If a business has employees in only one state, it can file form 940-EZ. A business with employees in

two or more states must file a Form 940.10. Employer “A” does not have to make a FUTA tax deposit until its liability reaches $100.00 or more in

any calendar quarter. If at the end of the year, the amount owed in FUTA taxes is less than $100.00,the employer will pay the amount due when it files Form 940-EZ or Form 940.

11. Because employer “B” has a FUTA tax liability in excess of $100.00 at this time, it should make itsFUTA tax deposit no later than one month after the end of the calendar quarter, or by April 30.

12. Such an entry is required because the amount paid for Workers’ Compensation Insurance is paid inadvance at the beginning of the year and is figured as an estimated amount. This estimate generallymust be adjusted when the actual liability has been obtained at the end of the year.

245

The Employer’s TaxResponsibilities:Principles andProcedures

8

¶

SOLUTIONS TO CHAPTER 8 MINI EXERCISES

1.

A. Expense ↑ Dr.

B. Liability ↑ Cr.

C. Liability ↑ Cr.

D. Liability ↑ Cr.

E. Liability ↑ Cr.

246

2. FICA–Medicare andFICA–Social Security Total wages of $500 will be subject to the tax

FUTA– Only $200 will be subject to the tax ($7,000 − 6,800 = $200)

3. A. July–Sept. 3rd Quarter 200AB. Oct.–Dec. 4th Quarter 200AC. Jan.–March 1st Quarter 200BD. Apr.–June 2nd Quarter 200B

4. The total of all the look-back periods is $53,000. Thus, Pete is classified as a semi-weekly despositor.His deposits will have to be made on either a Wednesday or a Friday.

5. A. Dec. 15B. on Wednesday of Week 2C. on Wednesday of Week 2D. on Wednesday of Week 2E. Due Friday of the next weekF. Due Friday of the same weekG. Due Friday of the same week

SOLUTIONS TO EXERCISES

8-1.

247

Aug. 9 Payroll Tax Expense 2 3 2 38FICA-Social Security Payable 1 2 0 90FICA-Medicare Payable 2 8 28SUTA Payable 7 2 80FUTA Payable 1 0 40

Record Employees payroll tax

FICA $900 + $750 + $300 = $1,950 × .062 = $120.90 (Social Security)$1,950 × .0145 = $28.28 (Medicare)

SUTA $900 + $400 = $1,300 × .056 = $72.80FUTA ($7,000 − $6,600) + $900 = $1,300 × .008 = $10.40

8-2.SUTA $1,300 × .049 = $63.70

SUTA $ 63.70FICA (SS + Med.) 149.18**FUTA 10.40**

Total Payroll Expense $ 223.28

** FICA and FUTA remain the same as in Exercise 1.

8-3.FICA Soc. Sec.* $3,650 × .062 = $ 226.30

Medicare* $3,650 × .0145 = 52.93SUTA 72.80**FUTA 10.40**

Total Payroll Tax Expense $ 362.43***($900 + $750 + $2,000) = $3,650

** SUTA and FUTA remain the same as in Exercise 8-1.

8-4.FICA (ee; Medicare and Soc. Sec.) $ 810FICA (er; Medicare and Soc. Sec.) 810FIT 3,000

$ 4,620

Since Wheat Fields Inc., is a monthly depositor, its deposits will be due 15 days after Januaryends.

EXERCISES (CONTINUED)

8-4. (continued)

248

Feb. 15 FICA-Social Security Payable 1 2 2 0 00FICA-Medicare Payable 4 0 0 00FIT Payable 3 0 0 0 00

Cash 4 6 2 0 00Deposit Form 941 taxes

Jul. 3 FICA-Social Security Payable 8 0 0 00FICA-MedicarePayable 2 0 0 00FIT Payable 3 0 0 5 00

Cash 4 0 0 5 00Deposit form 941 taxes

30 SUTA Payable 6 1 2 00Cash 6 1 2 00

30 FUTA Payable 1 4 3 00Cash 1 4 3 00

Deposit FUTA and SUTA tax

8-5.

FICA: Med. $160,000 × .0145 = $ 2,320FICA: S.S. 130,000 × .062 = 8,060SUTA 100,000 × .059 = 5,900FUTA 100,000 × .008 = 800

Total Payroll Tax Expense $17,080

8-6.If an employer pays $50,000 or more in Form 941 taxes during the IRS look-back period, it mustbe classified as a semi-weekly depositor for the next full calendar year (200C). Because Carol’sGrocery made a total of $58,299.43 in Form 941 payroll tax deposits ($13,783.26 + $14,893.22+ $14,601.94 + $15,021.01) in the look-back period it is considered a semi-weekly depositor.

8-7.If an employer pays less than $50,000 in Form 941 taxes during the IRS look-back period it mustbe classified as a monthly depositor for the next full calendar year. Because of the situation whereCarol’s Grocery downsized during the second quarter of 200B, it paid $49,400.35 in Form 941payroll tax deposits ($13,783.26 + $14,893.22 + $14,601.94 + $6,121.93). So, Carol’s should beclassified as a monthly depositor for the next full calendar year (200C).

8-8.

EXERCISES (CONTINUED)

8-9.

TaxableKing $500 × 13 = $6,500 $6,500Lane 500 × 13 = 6,500 6,500Move 600 × 13 = 7,800 7,000Slade 900 × 13 = 11,700 7,000

$27,000 × .008 = $216.00

8-10.

$15,000 = 150 × $.21 = $31.50 Prepaid Ins., Work Comp 829.50

$100 Cash 829.50

Paid Work Comp. Premium

$42,000 = 420 × $1.90 = $798.00

$100 TOTAL $829.50

249

Apr. 30 FUTA Payable 2 1 6 00Cash 2 1 6 00

Deposit of FUTA Tax

SOLUTIONS TO A PROBLEMS

PROBLEM 8A-1

(1)

250

Apr. 8 Payroll Tax Expense 5 9 3 58FICA-Social Security Payable 3 0 8 45FICA-Medicare Payable 7 2 14SUTA Tax Payable 1 8 4 11FUTA Tax Payable 2 8 88

Record Employer’s Payroll Tax$4,975 - 1,365 = $3,610Taxable Income for FUTA and SUTA(SUTA $3,610 × .051 = $184.11)(FUTA $3,610 × .008 = $28.88)

(2)

Allowance FICA&

Employee Marital Status Gross Soc. Sec. Medicare Federal Income Tax

Al Jones S-1 $ 850 $ 52.70 $12.33 $ 83

Janice King S-0 900 55.80 13.05 110

Alice Long S-2 800 49.60 11.60 60

Jill Reese S-0 1,060 65.72 15.37 134

Jeff Vatack S-2 1,365 84.63 19.79 144

$4,975 $308.45 $72.14 $ 531

Total FICA $380.59

PROBLEM 8A-2

251

Jan. 31 Payroll Tax Expense 1 2 9 4 73FICA-Social Security Payable 5 6 7 30FICA-Medicare Payable 1 3 2 68SUTA Tax Payable 5 2 1 55FUTA Tax Payable 7 3 20

Record Employer’s Payroll Tax(SUTA $9,150 × .057 = $521.55)(FUTA $9,150 × .008 = $73.20)

Feb. 28 Payroll Tax Expense 1 1 8 4 79FICA-Social Security Payable 5 4 4 05FICA-Medicare Payable 1 2 7 24SUTA Tax Payable 4 5 0 30Tax Payable 6 3 20

Record Employer’s Payroll Tax$2,1002,9002,900 ($7,000 - $4,100)(SUTA $7,900 × .057 = $450.30)(FUTA $7,900 × .008 = $63.20)

Mar. 31 Payroll Tax Expense 1 1 1 9 97FICA-Social Security Payable 7 0 0 91FICA-Medicare Payable 1 6 3 93SUTA Tax Payable 2 2 3 73FUTA Tax Payable 3 1 40

Record Employer’s Payroll Tax$2,975

950 ($7,000 − $6,050)(SUTA $3,925 × .057 = $223.73)(FUTA $3,925 × .008 = $31.40)

PROBLEM 8A-2 (CONTINUED)

252

Feb. 15 FICA-Social Security Payable 1 1 3 4 60FICA-Medicare Payable 2 6 5 36FIT Payable 1 1 1 9 00

Cash 2 5 1 8 96Deposit Form 941 Taxes

S.S. $ 567.30567.30

$1,134.60

Med. $ 132.68132.68

$ 265.36

Mar. 15 FICA-Social Security Payable 1 0 8 8 10FICA-Medicare Payable 2 5 4 48FIT Payable 1 0 5 3 00


Apr. 15 FICA-Social Security Payable 1 4 0 1 82FICA-Medicare Payable 3 2 7 86FIT Payable 1 6 8 9 00


(for Mar. 15) S.S. $ 544.05544.05

$1,088.10

Med. $ 127.24127.24

$ 254.48

(for Apr. 15) S.S. $ 700.91700.91

$1,401.82

Med. $ 163.93163.93

PROBLEM 8A-2 (CONCLUDED)

253

30 SUTA Payable 1 1 9 5 58Cash 1 1 9 5 58

Deposit of SUTA taxSUTA $ 521.55 (Jan.) ($9,100 × .057)

450.30 (Feb.) ($7,900 × .057)223.73 (Mar.) ($3,925 × .057)

$1,195.58

30 FUTA Payable 1 6 7 80Cash 1 6 7 80

Deposit of FUTA taxFUTA $73.20 + $63.20 + $31.40 = $167.80

PROBLEM 8A-3

254

2,518.96

PROBLEM 8A-4

255

Oct. 31 Payroll Tax Expense 7 9 1 02FICA-Social Security Payable 6 4 1 08FICA-Medicare Payable 1 4 9 94

Record employer’s payroll taxNov. 30 Payroll Tax Expense 8 2 9 48

FICA-Social Security Payable 6 7 2 26FICA-Medicare Payable 1 5 7 22

Record employer’s payroll taxDec. 31 Payroll Tax Expense 7 3 6 67


Record employer’s payroll tax

Nov. 15 FICA-Social Security Payable 1 2 8 2 16FICA-Medicare Payable 2 9 9 88FIT Payable 1 4 9 3 00


Tax LiabilityS.S. $641.08 × 2 = $1,282.16Med. $149.94 × 2 = 299.88FIT 1,493.00

$3,075.04

PROBLEM 8A-4 (CONTINUED)

256

Dec.15 FICA-Social Security Payable 1 3 4 4 52FICA-Medicare Payable 3 1 4 44FIT Payable 1 6 2 4 00



$3,282.96

Jan. 15 FICA-Social Security Payable 1 1 1 2 28FICA-Medicare Payable 3 6 1 06FIT Payable 2 0 5 0 00



$3,523.34

PROBLEM 8A-4 (CONCLUDED)

257

PROBLEM 8A-5

258

SOLUTIONS TO B PROBLEMS

PROBLEM 8B-1

(1)

259

Allowance FICA&

Employee Marital Status Gross Soc. Sec. Medicare Federal Income Tax

Al Jones S-1 $ 820 $ 50.84 $11.89 $ 80

Janice King S-2 890 55.18 12.91 72

Alice Long S-0 850 52.70 12.33 101

Jill Reese S-1 1,100 68.20 15.95 122

Jeff Vatack S-2 1,340 83.08 19.43 141

$5,000 $310.00 $72.51 $516

Total FICA $382.51

(2)

Apr. 8 Payroll Tax Expense 5 3 6 11FICA-Social Security Payable 3 1 0 00FICA-Medicare Payable 7 2 51SUTA Tax Payable 1 3 3 12FUTA Tax Payable 2 0 48

Record Employer’s Payroll Tax$5,000 - 2,440 = $2,560Taxable Income for FUTA and SUTA(SUTA $2,560 × .052 = $133.12)(FUTA $2,560 × .008 = $20.48)

PROBLEM 8B-2

260

Jan. 31 Payroll Tax Expense 1 1 9 4 27FICA-Social Security Payable 5 2 3 28FICA-Medicare Payable 1 2 2 39SUTA Tax Payable 4 8 1 08FUTA Tax Payable 6 7 52

Record Employer’s Payroll Taxes(SUTA $8,440 × .057 = $481.08)(FUTA $8,440 × .008 = $ 67.52)

Feb. 28 Payroll Tax Expense 1 2 3 2 09FICA-Social Security Payable 5 5 0 25FICA-Medicare Payable 1 2 8 69SUTA Tax Payable 4 8 5 07FUTA Tax Payable 6 8 08

Record employer’s payroll taxes$2,2002,9003,410 ($7,000 − $3,590)

Taxable Income in February = $8,510(SUTA $8,510 × .057 = $485.07)(FUTA $8,510 × .008 = $ 68.08)

Mar. 31 Payroll Tax Expense 1 1 0 5 48FICA-Social Security Payable 6 8 9 44FICA-Medicare Payable 1 6 1 24SUTA Tax Payable 2 2 3 44FUTA Tax Payable 3 1 36

Record employer’s payroll taxes$2,8201,100 ($7,000-5,900)

$3,920

Taxable Income in March = $3,920(SUTA $3,920 × .057 = $223.44)(FUTA $3,920 × .008 = $31.36)

PROBLEM 8B-2 (CONTINUED)

261

Feb. 15 FICA-Social Security Payable 1 0 4 6 56FICA-Medicare Payable 2 4 4 78FIT Payable 9 6 1 00

Cash 2 2 5 2 34Deposit Form 941 Taxes For Feb. 15:

S.S. $ 523.28523.28

$1,046.56

Med. $ 122.39122.39

$ 244.78

Mar. 15 FICA-Social Security Payable 1 1 0 0 50FICA-Medicare Payable 2 5 7 38FIT Payable 1 0 4 4 00

Cash 2 4 0 1 88Deposit Form 941 Taxes For March 15:

S.S. $ 550.25550.25

$1,100.50

Med. $ 128.69128.69

$ 257.38

Apr. 15 FICA-Social Security Payable 1 3 7 8 88FICA-Medicare Payable 3 2 2 48FIT Payable 1 4 9 6 00

Cash 3 1 9 7 36Deposit Form 941 Taxes For April 15:

S.S. $ 689.44689.44

$1,378.88

Med. $ 161.24161.24

$ 322.48

PROBLEM 8B-2 (CONCLUDED)

262

Apr. 30 SUTA Payable 1 1 8 9 59Cash 1 1 8 9 59

Deposit of SUTA taxSUTA $ 481.08 (Jan.) ($8,440 × .057)

485.07 (Feb.) ($8,510 × .057)223.44 (Mar.) ($3,920 × .057)

$1,189.59

Apr. 30 FUTA Payable 1 6 6 96Cash 1 6 6 96

Deposit of FUTA tax

FUTA $ 67.52 (Jan.) ($8,440 × .008)68.08 (Feb.) ($8,510 × .008)31.36 (Mar.) ($3,920 × .008)

$166.96

PROBLEM 8B-3

263

PROBLEM 8B-4

264

Oct. 31 Payroll Tax Expense 7 9 1 02FICA-Social Security Payable 6 4 1 08FICA-Medicare Payable 1 4 9 94

Record employer’s payroll taxNov. 30 Payroll Tax Expense 7 8 0 15


Record employer’s payroll taxDec. 31 Payroll Tax Expense 6 5 4 51


Record employer’s payroll tax

Nov. 15 FICA-Social Security Payable 1 2 8 2 16FICA-Medicare Payable 2 9 9 88FIT Payable 1 4 9 3 00



$3,075.04

PROBLEM 8B-4 (CONCLUDED)

265

Dec. 15 FICA-Social Security Payable 1 2 5 9 84FICA-Medicare Payable 3 0 0 46FIT Payable 1 4 9 4 00



$3,054.30

Jan. 15 FICA-Social Security Payable 9 6 1 00FICA-Medicare Payable 3 4 8 02FIT Payable 1 9 0 6 00


Tax LiabilityS.S. $480.50 × 2 = $ 961.00Med. $174.01 × 2 = 348.02FIT 1,906.00

$3,215.02

PROBLEM 8B-4

266

PROBLEM 8B-5

267

SOLUTIONS TO REAL WORLD APPLICATION #1

Sunshine School Supply Company

Option (1): Hire 30 additional workers and then lay them off at the end of the summer.

Tax amounts based on the temporary workers’ earnings:

GROSS EARNINGS

30 workers × 12 weeks × 40 hours/week × $6.50/hour $93,600.00

SUTA LIABILITY

$93,600 × 5.4% 5,054.40

FUTA LIABILITY

$93,600 × .8% 748.80

SOCIAL SECURITY TAX LIABILITY

$93,600 × 6.2% 5,803.20

MEDICARE TAX LIABILITY

$93,600 × 1.45% 1,357.20

SUBTOTAL FOR TEMPORARY WORKERS: $106,563.60

Tax amounts based on the permanent workers’ earnings:

SUTA LIABILITY

$7,000 × 500 workers × 5.4% $189,000.00

FUTA LIABILITY

$7,000 × 500 workers × .8% 28,000.00

SUBTOTAL FOR PERMANENT WORKERS: $217,000.00

Option (1) Total: $323,563.60

Option (2) TOTAL: Let a temporary agency supply 30 workers to Sunshine

for the summer.

Tax amounts based on the temporary workers:

AMOUNT PAID TO THE TEMPORARY AGENCY

30 workers × 12 weeks × 40 hours/week × $7.00/worker $100,800.00

TAX LIABILITIES FOR SUTA, FUTA, SOCIAL SECURITY, AND MEDICARE

None! All taxes are paid by the temporary agency -0-

SUBTOTAL FOR TEMPORARY WORKERS: $100,800.00

268

REAL WORLD APPLICATION #1 (CONTINUED)

Tax amounts based on the permanent workers:

SUTA LIABILITY

$7,000 × 500 workers × 4.1% $143,500.00

FUTA LIABILITY

$7,000 × 500 workers × .8% 28,000.00

SUBTOTAL FOR THE PERMANENT WORKERS: $171,500.00

OPTION (2) Total: $272,300.00

Key points in the memo to Miriam Holtz:

1. Using a temporary agency will reduce the payroll cost of Sunshine by $51,263.60—the differencebetween options (1) and (2).

2. Sunshine does not have to pay SUTA, FUTA, Social Security, and Medicare taxes on temporaryemployees which saves the company money.

3. Sunshine does not have to lay off workers at the end of summer, so the state reduces itsexperience/merit rating by 1.3 percent (5.4%–4.1%).

4. The lower state unemployment rating will save Sunshine money in the future on the amount it paysin unemployment taxes for its permanent workers.

5. It is easier for Sunshine to terminate a temporary worker who does not perform well on the job whenit uses workers from a temporary employment agency.

6. The temporary agency can place the workers in a different job situation at the end of summer. These workers do not have to seek other employment as they would using option (1) because they arealready employed by the temporary agency.

269

SOLUTIONS TO REAL WORLD APPLICATION #2

Pet World Dog Toy Company

Note to instructor: Students will probably write out their answers in a narrative form. Their answers shouldcontain the following facts as shown in the grid below:

270

C. When is the form D. Where do theB. What is reported sent to the amounts on the

Form Number A. Purpose of Form on the Form government? form come from?

1. Form 941 Reports the The employees’and One month after the General ledgerquarterly liability employer’s share of end of each calendar accounts for FICAfor FICA and FIT Social Security and quarter. An extra 10 Payable—Social

Medicare taxes and days into the next Security, FICAthe employees’ FIT month is granted if Payable—withheld. the employer has Medicare, and FIT

paid all deposits on Payabletime.

2. Form 940-EZ Reports the annual Gross earnings for One month after the General ledgerliability for FUTA the year and the end of the calendar accounts for WagesTaxes amount subject to year, or by January and Salaries

FUTA tax, as well as 31. An extra 10 days Expense, and FUTAFUTA deposits is granted if all FUTA Payable.made during the tax deposits haveyear. been made on time

(or February 10).

3. Form 8109 Used when making The type of payroll Use of this form From the generala federal payroll taxes being depends on the type ledger, amountstax deposit for deposited and the of tax being debited to payrollForm 941 or Form dollar amount. The deposited and the tax payable940-EZ taxes. employer’s name, deposit schedule the accounts. Amounts

address, and EIN. employer is using— are calculated permonthly, semi- the depositweekly, etc. schedule of the

employer.

4. Form W-2 Used to report the Gross earnings, Forms should be sent Individual employeeamounts earned by amounts withheld to the Social Security earnings records.an employee and for Social Security, Administration bythe amounts Medicare taxes, and February 28 ofwithheld for various FIT, SIT, and local each year.payroll taxes. tax withholdings.

Other items may bereported in somecases.

5. Form W-3 Used to reconcile Summary totals of Form should be sent Amounts comethe amounts found the amounts found in with the W-2 from addingon the Form W-2s on individual Form forms submitted to together thesubmitted under W-2s. Employer the Social Security individual “box”one EIN by an EIN, name, address, Administration by amounts on eachemployer. This number of Form February 28 each employee’s Formform is issued by W-2s attached, etc. year. W-2. This allowsSocial Security for properAdministration. reconciliation by

the Social SecurityAdministration.

SOLUTION TO REAL WORLD APPLICATION #3

The question in this case is whether Abby should be allowed to use the photocopy machine. If she uses themachine during an emergency or once in a while, I do not view her behavior as being unethical. However, ifshe frequently uses the machine for nonbusiness related matters, I would consider this behavior to beextremely unethical.

CONTINUING PROBLEM

ELDORADO COMPUTER CENTERGENERAL JOURNAL

PAGE 6

271

Date Account Titles and Description PR Dr. Cr.Dec. 31 Payroll Tax Expense 2 2 6 36

FICA—SS payable 1 2 5 86FICA—Medicare payable 2 9 45SUTA Tax payable 5 4 81FUTA Tax payable 1 6 24

Dec. 31 FICA-SS payable 2 5 1 72FICA-Medicare payable 5 8 90

Cash 3 1 0 62

Dec. 31 FUTA Tax payable 1 6 24SUTA Tax payable 5 4 81

Cash 7 1 05

Dec. 31 SIT payable 4 0 60Cash 4 0 60

272

Eldorado Computer Center Dec. 31, 200X

35 - 41325881

385 N. Escondido Blvd.

Escondido, CA 92025

Tony Freedman, Owner 1/14/200X

2,030 00

0

0

02 5 1 720

5 8 87

3 1 0 59

03

3 1 0 623 1 0 62

0

3 1 0 62

0

3 1 0 62

$ 2,030

$ 2,030

MINI PRACTICE SET

PETE’S MARKETGENERAL JOURNAL

PAGE 6

274

Date Account Titles and Description PR Dr. Cr.Jan. 15 FICA—Social Security Payable 8 2 1 80

FICA—Medicare Payable 2 0 0 00FIT Payable 6 0 0 00

Cash 1 6 2 1 80Deposit Dec. 941 Taxes

Jan. 31 SUTA Payable 1 5 5 00Cash 1 5 5 00

Deposit 4th Qtr. TaxJan. 31 FUTA Payable 8 8 00

Cash 8 8 00Deposit 4th Qtr. Tax

Jan. 31 Market Salaries Expense 3 0 0 0 00Sales Salaries Expense 5 5 0 0 00

FICA—Social Security Payable 5 2 7 00FICA—Medicare Payable 1 2 3 25Federal Income Tax Payable 1 0 2 4 00State Income Tax Payable 6 8 0 00Wages and Salaries Payable 6 1 4 5 75

Record Jan. payrollJan. 31 Payroll Tax Expense 1 1 3 4 75

FICA—Social Security Payable 5 2 7 00FICA—Medicare Payable 1 2 3 25SUTA Tax Payable 4 1 6 50FUTA Tax Payable 6 8 00

Record employee’s payroll tax($8,500 × .049 = $416.50 SUTA)($8,500 × .008 = $ 68.00 FUTA)

Feb. 1 Payroll Checking Cash 6 1 4 5 75Cash 6 1 4 5 75

Deposit money in payroll acct.Feb. 1 Wages and Salaries Payable 6 1 4 5 75

Payroll Checking Cash 6 1 4 5 75Pay employees

MINI PRACTICE SET


PAGE 7

275

Date Account Titles and Description PR Dr. Cr.Feb. 15 FICA—Social Security Payable1 1 0 5 4 00

FICA—Medicare Payable2 2 4 6 50Federal Income Tax Payable 1 0 2 4 00

Cash 2 3 2 4 50Deposit Jan. 941 Taxes

1 ($527.00 + $527.00)2 ($123.25 + $123.25)

Feb. 28 Market Salaries Expense 3 0 0 0 00Sales Salaries Expense 5 5 9 0 00


Record Feb. payrollFeb. 28 Payroll Tax Expense 1 1 4 6 77

FICA—Social Security Payable 5 3 2 58FICA—Medicare Payable 1 2 4 56SUTA Tax Payable 4 2 0 91FUTA Tax Payable 6 8 72

Record employer payroll taxes($8,590 × .049 = $420.91)($8,590 × .008 = $ 68.72)

Mar. 1 Payroll Checking Cash 6 2 0 0 66Cash 6 2 0 0 66

Deposit cash in payroll acct.Mar. 1 Wages and Salaries Payable 6 2 0 0 66


Mar. 15 FICA—Social Security Payable1 1 0 6 5 16FICA—Medicare Payable2 2 4 9 12Federal Income Tax Payable 1 0 4 5 00

Cash 2 3 5 9 28

MINI PRACTICE


PAGE 8

276

Date Account Titles and Description PR Dr. Cr.Deposit Feb. 941 taxes

1 ($532.58 + $532.58)2 ($124.56 + $124.56)

Mar. 31 Market Salaries Expense 4 0 0 0 00Sales Salaries Expense 6 8 3 5 00


Record March payrollMar. 31 Payroll Tax Expense 1 0 5 1 75

FICA—Social Security Payable 6 7 1 77FICA—Medicare Payable 1 5 7 11SUTA Tax Payable1 1 9 1 59FUTA Tax Payable2 3 1 28

Record employers payroll tax1 ($3,910 × .049 = $191.59)2 ($3,910 × .008 = $31.28)

Apr. 1 Payroll Checking Cash 7 4 8 9 32Cash 7 4 8 9 32

Deposit cash in payroll acct.Apr. 1 Wages and Salaries Payable 7 4 8 9 32


Apr. 15 FICA—Social Security Payable1 1 3 4 3 54FICA—Medicare Payable2 3 1 4 22Federal Income Tax Payable 1 6 5 0 00

Cash 3 3 0 7 76Deposit March 941 Taxes

1 ($671.77 + $671.77)2 ($157.11 + $157.11)

Apr. 30 FUTA Tax Payable 1 6 8 00Cash 1 6 8 00

EARNINGS TAXABLE EARNINGSAllowanceand Mari- Cumulative Cumulative

Date Employee tal Status Earnings Salary Regular Overtime Gross Earnings Unemp. Soc. Sec. Medicare

Jan. 31 Flynn, Fred S - 0 - 0 - 2 5 0 0 00 2 5 0 0 00 - - - 2 5 0 0 00 2 5 0 0 00 2 5 0 0 00 2 5 0 0 00 2 5 0 0 00

Jones, Mary S - 2 - 0 - 3 0 0 0 00 3 0 0 0 00 - - - 3 0 0 0 00 3 0 0 0 00 3 0 0 0 00 3 0 0 0 00 3 0 0 0 00

Vron, Lilly S - 1 - 0 - 3 0 0 0 00 3 0 0 0 00 - - - 3 0 0 0 00 3 0 0 0 00 3 0 0 0 00 3 0 0 0 00 3 0 0 0 00

- 0 - 8 5 0 000 8 5 0 0 00 - - - 8 5 0 0 00 8 5 0 0 00 8 5 0 0 00 8 5 0 0 00 8 5 0 0 00

Feb. 28 Flynn, Fred S - 0 2 5 0 0 00 2 5 9 0 00 2 5 9 0 00 - - - 2 5 9 0 00 5 0 9 0 00 2 5 9 0 00 2 5 9 0 00 2 5 9 0 00

Jones, Mary S - 2 3 0 0 0 00 3 0 0 0 00 3 0 0 0 00 - - - 3 0 0 0 00 6 0 0 0 00 3 0 0 0 00 3 0 0 0 00 3 0 0 0 00

Vron, Lilly S - 1 3 0 0 0 00 3 0 0 0 00 3 0 0 0 00 - - - 3 0 0 0 00 6 0 0 0 00 3 0 0 0 00 3 0 0 0 00 3 0 0 0 00

8 5 0 0 00 8 5 9 0 00 8 5 9 0 00 - - - 8 5 9 0 00 17 0 9 0 00 8 5 9 0 00 8 5 9 0 00 8 5 9 0 00

Mar. 31 Flynn, Fred S - 0 5 0 9 0 00 2 5 7 5 00 2 5 7 5 00 - - - 2 5 7 5 00 7 6 6 5 00 1 9 1 0 00 2 5 7 5 00 2 5 7 5 00

Jones, Mary S - 2 6 0 0 0 00 4 0 0 0 00 4 0 0 0 00 - - - 4 0 0 0 00 10 0 0 0 00 1 0 0 0 00 4 0 0 0 00 4 0 0 0 00

Vron, Lilly S - 1 6 0 0 0 00 4 2 6 0 00 4 2 6 0 00 - - - 4 2 6 0 00 10 2 6 0 00 1 0 0 0 00 4 2 6 0 00 4 2 6 0 00

17 0 9 0 00 10 8 3 5 00 10 8 3 5 00 - - - 10 8 3 5 00 27 9 2 5 00 3 9 1 0 00 10 8 3 5 00 10 8 3 5 00

Deductions DistributionFICA Market Sales

Salaries SalariesEmployee Soc. Sec. Medicare FIT SIT Net Pay Exp. Exp.

Flynn, Fred 1 5 5 00 3 6 25 3 1 7 00 2 0 0 00 1 7 9 1 75 2 5 0 0 00

Jones, Mary 1 8 6 00 4 3 50 3 1 9 00 2 4 0 00 2 2 1 1 50 3 0 0 0 00

Vron, Lilly 1 8 6 00 4 3 50 3 8 8 00 2 4 0 00 2 1 4 2 50 3 0 0 0 00

5 2 7 00 1 2 3 25 1 0 2 4 00 6 8 0 00 6 1 4 5 75 3 0 0 0 00 5 5 0 0 00

Flynn, Fred 1 6 0 58 3 7 56 3 3 8 00 2 0 7 20 1 8 4 6 66 2 5 9 0 00

Jones, Mary 1 8 6 00 4 3 50 3 1 9 00 2 4 0 00 2 2 1 1 50 3 0 0 0 00

Vron, Lill 1 8 6 00 4 3 50 3 8 8 00 2 4 0 0 2 1 4 2 50 3 0 0 0 00

5 3 2 58 1 2 4 56 1 0 4 5 00 6 8 7 20 6 2 0 0 66 3 0 0 0 00 5 5 9 0 00

Flynn, Fred 1 5 9 65 3 7 34 3 3 8 00 2 0 6 00 1 8 3 4 01 2 5 7 5 00

Jones, Mary 2 4 8 00 5 8 00 5 8 9 00 3 2 0 00 2 7 8 5 00 4 0 0 0 00

Vron, Lilly 2 6 4 12 6 1 77 7 2 3 00 3 4 0 80 2 8 7 0 31 4 2 6 0 0

6 7 1 77 1 5 7 11 1 6 5 0 00 8 6 6 80 7 4 8 9 32 4 0 0 0 00 6 8 3 5 00

MINI PRACTICE SET


PAGE 9

277

Date Account Titles and Description PR Dr. Cr.Deposit FUTA owed

($68 + $68.72 + $31.28)Apr. 30 SUTA Tax Payable 1 0 2 9 00

Cash 1 0 2 9 00Deposit SUTA owed

($416.50 + $420.91 + $191.59)

PETE’S MARKETPAYROLL REGISTER

Taxable Amounts for FUTA and SUTA:1. $7,000 − $5,000 = $1,910

2. $7,000 − $6,000 = $1,000

3. $7,000 − $6,000 = $1,000

278

Pete’s Market March 31, 200X

42 - 4583312

4 Sun Avenue Swampscott, MA 01970

27,925 00

3,7 19 00

3,7 19 00

3,462 70

809 83

4,272 53

01

4,272 547,991 54

-0-

7,991 54

7,991 54

-0-

$ 27,925 00

$ 27,925 00

-3-

2,324.50 2,359.28 3,307.76 7,991.54

Owner 4/30/200X

smch08

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