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Perfect Your
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Analyzing Payroll Records 15 Pts.

Guide Analyzing Transactions Affecting Payroll 5 Pts.

13 Analyzing Form W-2

Total
10 Pts.
30 Pts.

Part One—Analyzing Payroll Records

Directions: For each of the following items, select the choice that best
completes the statement. Print the letter identifying your choice in the Answers
Answers column. 1.
1. All the payroll information needed to prepare payroll and tax reports is found on
(A) Form W-4 and the employee earnings record (B) Form W-4 and the payroll register
(C) the payroll register and the employee earnings record (D) Form W-4. (p. 378)
2.

2. The payroll journal entry is based on the totals of the payroll register (A) Total Earnings
column, each deduction column, and the Net Pay column (B) Total Earnings, Earnings
Regular, Earnings Overtime, and Deductions Total columns (C) Earnings Regular, Earnings
Overtime, and Deductions Total columns (D) Total Earnings, Earnings Regular, and
Earnings Overtime Total columns. (p. 379)
3.
3. The Total Earnings column total of a payroll register is journalized as a debit to (A) Cash
(B) Salary Expense (C) Employee Income Tax Payable (D) Social Security Tax Payable. (p. 380)
4.
4. The total of the Federal Income Tax column of a payroll register is credited to (A) a
revenue account (B) an expense account (C) a liability account (D) an asset account. (p. 380)
5.
5. The total of the Net Pay column of the payroll register is credited to (A) a revenue account
(B) an expense account (C) an asset account (D) a liability account. (p. 380)
6.
6. When a semimonthly payroll is paid, the credit to Cash is equal to the (A) total earnings
of all employees (B) total deductions for income tax and social security tax (C) total
deductions (D) net pay of all employees. (p. 380)
7.
7. Employer payroll taxes are (A) assets (B) expenses (C) revenues (D) none of these. (p. 382)
8.
8. Payroll taxes that are paid by both the employer and the employee are (A) federal
unemployment tax and social security tax (B) federal unemployment tax and Medicare tax
(C) social security tax and Medicare tax (D) federal income tax, social security tax, and
Medicare tax. (p. 382)
9.
9. A tax paid to administer the unemployment program is the (A) social security tax (B)
Medicare tax (C) federal unemployment tax (D) state unemployment tax. (p. 382)
10.
10. A state tax used to pay benefits to unemployed workers is the (A) social security tax
(B) Medicare tax (C) unemployment tax (D) state unemployment tax. (p. 382)
11.
11. An employee’s earnings subject to unemployment taxes are referred to as (A) gross
earnings (B) net earnings (C) FUTA earnings (D) accumulated earnings. (p. 383)
12.
12. Each employer who withholds income tax, social security tax, and Medicare tax from
employee earnings must furnish each employee an (A) IRS Form W-4 (B) IRS Form W-2
(C) IRS Form W-3 (D) IRS Form 941. (p. 387)
13.
13. Each employer is required by law to report payroll taxes on an (A) IRS Form W-4 (B) IRS
Form 941 (C) IRS Form W-2 (D) IRS Form W-3. (p. 389)
14.
14. The form used to report annual earnings and payroll taxes for all employees to the Social
Security Administration is the (A) W-2 (B) Form 941 (C) W-3 (D) W-4. (p. 390)
15.
15. To record the payment of federal unemployment tax, the account debited is (A) a revenue
account (B) an expense account (C) a liability account (D) an asset account. (p. 396)
Chapter 13 Accounting for Payroll and Payroll Taxes • 347
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Part Two—Analyzing Transactions Affecting Payroll
Directions: Analyze each of the following transactions into debit and credit parts.
Print the letters identifying your choices in the proper Answers column.
Answers
Account Titles Transactions Debit Credit
A. Cash 1. Paid cash for semimonthly _____________
payroll. (p. 380)
B. Employee Income Tax 2. Recorded employer payroll
Payable taxes expense. (p. 384)
C. Health Insurance 3. Paid cash for liability for employee
Premiums Payable income tax, social security tax, and
Medicare tax. (p. 394)

D. Medicare Tax Payable 4. Paid cash for federal unemployment

tax liability. (p. 396)
E. Payroll Taxes Expense 5. Paid cash for state unemployment

F. Retirement Contributions tax liability. (p. 396)

Payable
G. Salary Expense
H. Social Security Tax
Payable
I. Unemployment Tax
Payable—Federal
J. Unemployment Tax
Payable—State

348 • Working Papers TE

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Name Date Class

Part Three—Analyzing Form W-2

Directions: Analyze the following statements about a Form W-2, Wage and Tax Statement. Use the Form
W-2 below to answer the specific questions about John Butler. Place a T for True or an F for False in the
Answers column to show whether each of the following statements is true or false. (p. 387)

a Employee’s social security

22222 number OMB No. 1545-0008

b Employer identification number (EIN) 194-81-5823 1 Wages, tips, other compensation 2 Federal income tax withheld
31-0429632 30,273.75 620.00
c Employer’s name, address, and ZIP code 3 Social security wages 4 Social security tax withheld
30,273.75 1,876.97
ThreeGreen Products, 5 Medicare wages and tips 6 Medicare tax withheld
Inc. 1501 Commerce 30,273.75 438.97
7 Social security tips 8 Allocated tips
Street
Carlisle, PA 17013 9 10 Dependent care benefits

e Employee’s first name and initial Last name Suff. 11 Nonqualified plans 12a
C

John P. Butler o
d
e
13 Statutory
employee
Retirement Third-party
plan sick pay
12b
C
o
d
e
1014 Bosler Ave. 14 Other 12c
C
o
Carlisle, PA 17013 d
e

12d
C
o
d
e

f Employee’s address and ZIP code

15 State Employer’s state ID number 16 State wages, tips, etc. 17 State income tax 18 Local wages, tips, etc. 19 Local income tax 20 Locality name

W-2 Wage and Tax Department of the Treasury—Internal Revenue Service

Form Statement
Copy 1—For State, City, or Local Tax Department
20--

Answers
1. John Butler’s total salary is more than his total social security salary. 1.

2. This Form W-2 shows John Butler’s net pay for the entire year. 2.

3. The amount withheld for Mr. Butler’s social security tax was more than 3.

the amount withheld for his federal income tax.

4. State income tax was withheld from Mr. Butler’s salary. 4.

5. All deductions from Mr. Butler’s salary for taxes and retirement plan contributions are 5.

shown on his Form W-2.

6.
6. This Form W-2 would indicate whether Mr. Butler had more than one employer during
the year.
7.
7. If an employee works for several employers during the year, that employee must receive a
Form W-2 from each employer.
8.
8. An employer is required to provide employees with a Form W-2 no later than January 31
of the year following the one for which the report has been completed.
9. When John Butler files his federal income tax return, he must attach Copy A of Form W-2 to 9.

his return.
10. Businesses in states with state income tax must prepare additional copies of Form W-2. 10.

Chapter 13 Accounting for Payroll and Payroll Taxes • 349

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Recording a payroll
1.

Salary Expense

Name
©
part.

13-1
13,800.00
2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in

Employee Income Tax Payable

381
WORK TOGETHER, p.
925.00

Social Security Tax Payable

855.60

Medicare Tax Payable

200.10

Cash
11,819.30
Chapter 13 Accounting for Payroll and Payroll Taxes • 351

2.

CASH PAYMENTS JOURNAL PAGE 6

Date
1 2 3 4 5

CK. GENERAL ACCOUNTS PURCHASES

DATE ACCOUNT TITLE POST. PAYABLE DISCOUNT CASH
NO. REF. DEBIT CREDIT DEBIT CREDIT CREDIT
20--
1 May 15 Salary Expense 564 13 8 0 0 00 11 8 1 9 30 1

2 Employee Income Tax Payable 9 2 5 00 2

3 Social Security Tax Payable 8 5 5 60 3

4 Medicare Tax Payable 2 0 0 10 4

Class
5 5

6 6
Name Date Class

13-2 WORK TOGETHER, p. 386

Recording employer payroll taxes 1.,

2.

1 2 3 4 5
Prior Earnings to Earnings for
Accumulated Equal Current Pay FUTA
Employee Name Earnings FUTA Tax Period Earnings
Base
Ellis, Nick C. $6,100.00 $ 900.00 $ 762.50 $ 762.50
Jennings, Evan P. 7,980.00 0.00 1,040.00 0.00
Powers, Virginia A. 4,380.00 2,620.00 527.00 527.00
Wolfe, Kerry T. 6,850.00 150.00 849.50 150.00
Totals $3,179.00 $1,439.50

Social Security Tax Payable, 6.2% $ 197.10

Medicare Tax Payable, 1.45% 46.10
Unemployment Tax Payable—Federal, 0.8% 11.52
Unemployment Tax Payable—State, 5.4% 77.73
Total Payroll Taxes $ 332.45

3.
GENERAL JOURNAL PAGE 10
DATE ACCOUNT TITLE DOC. POST. DEBIT CREDIT
NO. REF.

7 15 Payroll Taxes Expense M46 3 3 2 45 7

8 Social Security Tax Payable 1 9 7 10 8

9 Medicare Tax Payable 4 6 10 9

10 Unemployment Tax Payable—Federal 1 1 52 10

11 Unemployment Tax Payable—State 7 7 73 11

12 12

13 13

14 14

15 15

16 16

17 17

18 18

19 19

20 20

Chapter 13 Accounting for Payroll and Payroll Taxes • 353

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Name Date Class

13-3 WORK TOGETHER, p. 391

Reporting withholding and payroll taxes 1.

941 for
Form Employer’s QUARTERLY Federal Tax 951110

20--:
OMB No. 1545-0029
Return
Department of the Treasury — Internal Revenue Service
(Rev. October 20--)

(EIN)
Employer identification number
7 0 —
8 4 1 8 6 2 Report for this Quarter of 20--
(Check one.)

Name (not your trade name) Concept 5

✔ 1: January, February, March

Trade name (if any)

Designs 2: April, May, June

Address 12043 Washington 3: July, August, September

Number Street Suite or room number
Street
Naperville IL 60540-4158
4: October, November, December

City State ZIP code

Read the separate instructions before you complete Form 941. Type or print within the boxes.
Part 1: Answer these questions for this quarter.
1 Number of employees who received wages, tips, or other compensation for the pay period
including: Mar. 12 (Quarter 1), June 12 (Quarter 2), Sept. 12 (Quarter 3), or Dec. 12 (Quarter 4) 1 8
2 Wages, tips, and other compensation...............................................................................................2 35,640 . 00
3 Income tax withheld from wages, tips, and other compensation...................................................3 2,144 . 00
4 If no wages, tips, and other compensation are subject to social security or Medicare tax Check and go to line 6e.
Column 1 Column *Report wages/tips for this quarter,
5a Taxable social security wages* . . 35,640 . 00 × .124 = 2 4,419 . 36 including those paid to qualified
new employees, on lines 5a–5c.
5b Taxable social security tips*. . . 0. × .124 = 0. The social security tax exemption
on wages/tips will be figured on
5c Taxable Medicare wages & tips* . 35,640 . 00 × .029 = 1,033 . 56 lines 6c and 6d and will reduce the
tax on line 6e.

5d Add Column 2 line 5a, Column 2 line 5b, and Column 2 line 5c . . . . . . . . . 5d 5,452 . 92
6a Number of qualified employees first paid exempt wages/tips this quarter See instructions for definitions of
qualified employee and
6b Number of qualified employees paid exempt wages/tips this quarter exempt wages/tips.

6c Exempt wages/tips paid to qualified employees this quarter . × .062 = 6d 0.

6e Total taxes before adjustments (line 3 + line 5d – line 6d = line 6e) . . . . . . . . . 6e 7,596 . 92
7a Current quarter’s adjustment for fractions of cents . . . . . . . . . . . . . 7a 0.
7b Current quarter’s adjustment for sick pay . . . . . . . . . . . . . . . . 7b 0.
7c Current quarter’s adjustments for tips and group-term life insurance . . . . . . . 7c 0.
8 Total taxes after adjustments. Combine lines 6e through 7c.............................................................8 7,596 . 92
9 Advance earned income credit (EIC) payments made to employees.............................................9 0.
10 Total taxes after adjustment for advance EIC (line 8 – line 9 = line 10)..........................................10 7,596 . 92

11 Total deposits, including prior quarter overpayments...................................................................11

7,596 . 92
12a COBRA premium assistance payments (see instructions) . . . . . . . . . . . 12a
0.
12b Number of individuals provided COBRA premium assistance . .
Complete lines 12c, 12d, and 12e
12c Number of qualified employees paid exempt wages/tips March 19–31 only for the 2nd quarter of 20--.

12d Exempt wages/tips paid to qualified employees March . × .062 = 12e 0.

19–31

13 Add lines 11, 12a, and 12e.................................................................................................................13

7,596 . 92
14 Balance due. If line 10 is more than line 13, enter the difference and see instructions . . . 14
0.
15 Overpayment. If line 13 is more than line 10, enter the
difference . Check one: Apply to next return. Send a refund.

You MUST complete both pages of Form 941 and SIGN it. Next
For Privacy Act and Paperwork Reduction Act Notice, see the back of the Payment Voucher. Cat. No. 17001Z Form 941 (Rev. 10-20--)
 Chapter 13 Accounting for Payroll and Payroll Taxes • 355
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
13-3 WORK TOGETHER (concluded)

950210
Name (not your trade name) Employer identification number (EIN)

Concept Designs 70-8418625

Part 2: Tell us about your deposit schedule and tax liability for this quarter.

If you are unsure about whether you are a monthly schedule depositor or a semiweekly schedule depositor, see Pub. 15
(Circular E), section 11.
Write the state abbreviation for the state where you made your deposits OR write “MU” if you made your
16 I L deposits in multiple states.
17 Check one: Line 10 on this return is less than $2,500 or line 10 on the return for the preceding quarter was less than $2,500,
and you did not incur a $100,000 next-day deposit obligation during the current quarter. Go to Part 3.

✔ You were a monthly schedule depositor for the entire quarter. Enter your tax liability
for each month and total liability for the quarter.

Tax liability: Month 1 2,478 . 92

Month 2 2,538 . 70
Month 3 2,579 . 30
Total liability for quarter 7,596 . 92 Total must equal line 10.
You were a semiweekly schedule depositor for any part of this quarter. Complete Schedule B (Form 941):
Report of Tax Liability for Semiweekly Schedule Depositors, and attach it to Form 941.

356 • Working Papers

 Paying withholding and payroll taxes 1.,
2.

Name
©
part.

13-4
2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in

CASH PAYMENTS JOURNAL PAGE 14

1 2 3 4 5
GENERAL ACCOUNTS PURCHASES
CK. POST. PAYABLE DISCOUNT CASH
DATE ACCOUNT TITLE REF. CREDIT

397
WORK TOGETHER, p.
NO. DEBIT CREDIT DEBIT CREDIT
20--
1 Apr. 15 Employee Income Tax Payable 495 1 320 00 4 6 0 6 44 1

2 Social Security Tax Payable 2 663 52 2

3 Medicare Tax Payable 622 92 3

4 30 Unemployment Tax Payable—Federal 522 515 52 5 1 5 52 4

5 30 Unemployment Tax Payable—State 523 1 159 92 1 1 5 9 92 5

6 6

7 7

8 8

9 9

10 10

11 11
Chapter 13 Accounting for Payroll and Payroll Taxes • 359

12 12

13 13

14 14

15 15

Date
16 16

17 17

18 18

19 19

20 20

21 21

22 22

Class
23 23

24 24

25 25