4.01 -- Apply procedures to reconcile a bank statement and prepare related
journal entries.
Textbook Chapters: 5
I.
II.
III.
IV.
V.
Bank reconciliation is the process of determining any differences between the bank
statement and the checkbook. Reconciling is an important aspect of cash control and should
be completed as soon as the bank statement is received.
A dishonored check is a check that the bank refuses to pay. A dishonored check may also
be called an NSF or Not Sufficient Funds check. Banks may dishonor checks for several
reasons.
a. The account of the person who wrote the check has insufficient funds to pay the check.
b. The check appears to be altered.
c. The signature of the person who signed the check does not match the one on the
signature card at that bank.
d. The amounts written in figures and in words do not agree.
e. The check is postdated.
f. The person who wrote the check has stopped payment on the check.
Procedure for Reconciling a Bank Statement
a. Procedure for calculating adjusted checkbook balance (left side of reconciliation form)
i. Write the date on the reconciliation form.
ii. Record the balance from the checkbook.
iii. Subtract any bank service charges in the Bank Charges section.
iv. Write in the Adjusted Checkbook Balance.
b. Procedure for calculating adjusted bank balance (right side of reconciliation form)
i. Write the date on the reconciliation form.
ii. Record the ending balance from the bank statement.
iii. Add outstanding deposits.
iv. Calculate the subtotal.
v. Subtract outstanding checks.
vi. Write in the Adjusted Bank Balance.
c. Procedure for Comparing Adjusted Balances
i. If the two balances are equal, the account is reconciled.
ii. If the two balances are not equal, find and correct the error(s) before any more
work is done.
Procedures for Recording and Journalizing a Bank Service Charge
a. Procedure for recording a bank service charge in the checkbook
i. Write Service charge on the check stub under Other.
ii. Write the amount of the charge in the Amount column.
iii. Calculate and record the new subtotal.
b. Procedure for journalizing a bank service charge
i. Write the date in the Date column of the Journal.
ii. Write the title of the account to be debited, Miscellaneous Expense, in the
Account Title column.
iii. Record the amount debited in the Debit column. (If using a multicolumn journal,
record the amount debited in the General Debit column.)
iv. Write the title of the account to be credited, Cash, in the Account Title column.
v. Record the amount credited in the Credit column. (If using a multicolumn journal,
record the amount credited in the Cash Credit column.)
vi. Post the entry to the appropriate General ledger accounts.
Procedures for Recording and Journalizing a Dishonored Check
VI.
a. Procedure for recording a dishonored check on a check stub
i. Write Dishonored check on the line under the heading Other. (The amount to be
recorded is the amount of the check plus any service fee charged by the bank.)
ii. Write the total of the dishonored check in the amount column.
iii. Calculate and record the new subtotal on the Subtotal line.
b. Procedure for journalizing a dishonored check
i. Write the date in the Date column.
ii. Write the title of the account to be debited, Accounts Receivable/Vendor, in the
Account Title column.
iii. Record the amount debited in the General Journal column. (Amount is the
amount of the check and any bank service fee charged for the dishonored
check.)
iv. Write the amount credited in the Cash Credit column.
v. Write the source document number in the Doc. No. column.
vi. Post the entry to the appropriate general ledger accounts.
Procedure for Reconciling General Ledger Cash Account to Balance with Adjusted Bank
Balance
a. After reconciling bank statement with checkbook, compare the general ledger Cash
balance with the Adjusted Bank Balance.
b. If all adjusting entries have been posted properly, the general ledger Cash account
balance will equal the Adjusted Bank Balance and the Adjusted Checkbook Balance.
KEY TERMS




Bank statement
Cancelled checks
Outstanding checks
Outstanding deposits




Bank service charge
Reconciliation form
Bank reconciliation
Dishonored check
(or NSF check)
4.01 Sample Questions
Scenario 4.01 B
On October 29 of the current year, McDowell Company received a bank statement dated
October 28. The following information is obtained from the bank statement and from the
records of the business:
Bank statement balance
$1,625.00
Outstanding checks:
Bank service charge
3.00
No. 123
$ 80.00
Outstanding deposit, October 28
300.00
No. 125
75.00
Checkbook balance on Check Stub No. 126 $1,477.00
1.
In Scenario 4.01 B, calculate the adjusted checkbook balance.
A.
$1,325.00
B.
$1,474.00
C.
$1,622.00
D.
$1,925.00
Scenario 4.01 D
On December 3, Union Manufacturing Company received a bank statement dated
November 30. The following information is obtained from the bank statement and from the
records of the business:
Bank statement balance
$3,425.00
Outstanding checks:
Bank service charge
$4.50
No. 290
$187.50
Outstanding deposits:
No. 294
$67.50
November 29
$300.00
November 30
$400.00
Checkbook balance on Check Stub No. 296
$3,874.50
2.
In Scenario 4.01 D, what is the journal entry to record the bank service charge?
A.
Debit Transaction Fee $4.50, Credit Cash $4.50
B.
Debit Cash $4.50, Credit Transaction Fee $4.50
C.
Debit Miscellaneous Expense $4.50, Credit Cash $4.50
D.
Debit Cash $4.50, Credit Miscellaneous Expense $4.50
3.
On December 23, Wake Incorporated received notice from the bank of a dishonored
check from Davie Company in the amount of $125.00. The bank charged a service fee of
$25.00. What is the correct journal entry for Wake Incorporated to record the dishonored
check?
A.
Debit Accounts Receivable-Davie Company $125.00, Debit Bank Service
Charge $25.00, Credit Cash $150.00
B.
Debit Accounts Receivable-Davie Company $150.00, Credit Bank Service
Charge $25.00, Credit Cash $125.00
C.
Debit Accounts Receivable-Davie Company $150.00, Credit Cash $150.00
D.
Debit Cash $150.00, Credit Accounts Receivable-Davie Company $150.00
Scenario 4.01 D
On December 3, Union Manufacturing Company received a bank statement dated
November 30. The following information is obtained from the bank statement and from the
records of the business:
Bank statement balance
$3,425.00
Outstanding checks:
Bank service charge
$4.50
No. 290
$187.50
Outstanding deposits:
No. 294
$67.50
November 29
$300.00
November 30
$400.00
Checkbook balance on Check Stub No. 296 $3,874.50
4.
In Scenario 4.01 D, what is the adjusted checkbook balance?
A.
$3,420.50
B.
$3,870.00
C.
$4,120.50
D.
$4,319.50
Scenario 4.01 F
On February 28 of the current year, Yancey Company received a bank statement dated
February 27. The following information is obtained from the bank statement and from the
records of the business:
Bank statement balance
$3,500.00
Outstanding checks:
Bank service charge
$3.50
No. 234
$100.00
Outstanding deposits:
No. 235
$90.00
February 27
$500.00
February 28
$200.00
Checkbook balance on Check Stub No. 237
$3,873.00
5.
In Scenario 4.01 F, what is the adjusted bank balance?
A.
$2,800.00
B.
$3,173.00
C.
$3,869.50
D.
$4,010.00
14.
On April 16, Caldwell Company
received notice from the bank of a
dishonored check from Hickory Hosiery in
the amount of $55.00. The bank charged
a service fee of $25.00. What is the
correct journal entry for Caldwell
Company to record the dishonored
check?
A.
Debit Accounts ReceivableHickory Hosiery $55.00, debit
Bank Service Charge $25.00;
credit Cash $80.00
B.
Debit Accounts ReceivableHickory Hosiery $80.00, Credit
Bank Service Charge $25.00,
Credit Cash $55.00
C.
Debit Accounts ReceivableHickory Hosiery $80.00; credit
Cash $80.00
D.
Debit Cash $80.00; credit
Accounts Receivable-Hickory
Hosiery $80.00
15.
On February 14, Watauga
Enterprises received notice from the bank
of a dishonored check from Wilkes
Company in the amount of $200.00. The
bank charged a service fee of $25.00.
What is the correct journal entry for
Watauga Enterprises to record the
dishonored check?
A.
Debit Accounts ReceivableWilkes Company $200.00, debit
Bank Service Charge $25.00;
credit Cash $225.00
B.
Debit Accounts ReceivableWilkes Company $225.00; credit
Bank Service Charge $25.00,
credit Cash $200.00
C.
Debit Accounts ReceivableWilkes Company $225.00; credit
Cash $225.00
D.
Debit Cash $225.00; credit
Accounts Receivable-Wilkes
Company $225.00
4.02 - Apply procedures to maintain a petty cash fund and prepare related
journal entries.
Textbook Chapters: 5
I.
II.
Procedure for Establishing Petty Cash
a. Petty cash is an amount of cash kept on hand and used for making small payments for
which writing a check is not time- or cost-effective.
b. Petty cash is an asset with a normal debit balance.
c. Determine the amount of petty cash needed.
d. Make the payment for petty cash (write the check).
e. Journalize the petty cash transaction.
i. Debit Petty Cash.
ii. Credit Cash.
Procedure for Replenishing Petty Cash
a. Prove/reconcile petty cash.
i. Add all amounts on petty cash slips. A Petty Cash Slip or Voucher is a form
showing proof of a petty cash payment and contains:
1. Petty cash slip number
2. Date of petty cash payment
3. To whom paid
4. Reason for the payment
5. Amount paid
6. Account in which the amount is to be recorded
7. Signature of petty cashier – person approving the petty cash payment
ii. Count cash remaining in the petty cash fund.
iii. Compare the total of #1 + #2 with starting balance of petty cash. The two
amounts should equal. (Possible Petty Cash Issues – Cash Over/Short occurs
when the total amount of cash and petty cash slips in the petty cash fund does
not agree with the reconciled petty cash balance.)
b. Prepare a Petty Cash Requisition form for the amount needed to replenish petty cash.
c. Journalize the entry to replenish Petty Cash. Three possible scenarios for the
procedure include:
i. With no shortage or overage
1. Debit the appropriate expense accounts.
2. Credit Cash.
ii. With an overage
1. Debit the appropriate expense accounts.
2. Credit Cash for the necessary amount to balance petty cash.
3. Credit Cash Over/Short for the overage amount.
iii. With a shortage
1. Debit the appropriate expense accounts.
2. Debit Cash Over/Short for the shortage amount.
3. Credit Cash for the necessary amount to balance petty cash.
KEY TERMS
•
•
•
•
Petty cash
Petty cash slip/voucher
Petty cashier
Petty cash requisition
•
Cash short/over
4.02 Sample Questions
1.
Michael wants to establish a $500
petty cash fund for his business. He has
requested a check for $500. What is the
correct journal entry to record the
transaction?
A.
Debit Cash $500 and credit
Petty Cash $500
B.
Debit Miscellaneous
Expense $500 and credit Cash
$500
C.
Debit Petty Cash $500 and
credit Cash $500
D.
Debit Petty Cash $500 and
credit Miscellaneous Expense
$500
2.
Mary wants to replenish the $200
petty cash fund. She has receipts for the
following total payments: supplies, $25;
and repairs, $45. A cash count shows
$130 in the petty cash box. What is the
correct journal entry to record the
transaction?
A.
Debit Cash $70 and credit
Miscellaneous Expense $70
B.
Debit Miscellaneous
Expense $70 and credit Cash $70
C.
Debit Repair Expense $45,
debit Supplies $25 and credit Cash
$70
D.
Debit Repair Expense $45,
debit Supplies $25 and credit Petty
Cash $70
3.
David wants to replenish the $150
petty cash fund. He has receipts for the
following total payments: supplies, $36;
and postage (Office Expense), $27. A
cash count shows $87 in the petty cash
box. What is the correct journal entry to
record the transaction?
A.
Debit Office Expense $27,
debit Supplies $36 and credit Cash
$63
B.
Debit Miscellaneous
Expense $63 and credit Cash $63
C.
Debit Cash $63 and credit
Miscellaneous Expense $63
D.
Debit Office Expense $27,
debit Supplies $36 and credit Petty
Cash $63
4.
Scott wants to replenish the $225
petty cash fund. He has receipts for the
following total payments: supplies, $35;
and repairs, $15. A cash count shows
$175 in the petty cash box. What is the
correct journal entry to record the
transaction?
A.
Debit Cash $50 and credit
Miscellaneous Expense $50
B.
Debit Miscellaneous
Expense $50 and credit Cash $50
C.
Debit Repair Expense $15,
debit Supplies $35 and credit Cash
$50
D.
Debit Repair Expense $15,
debit Supplies $35 and credit Petty
Cash $50
5.
Claire wants to establish a $250
petty cash fund for her business. She
requested a check for $250. What is the
correct journal entry to record the
transaction?
A.
Debit Cash $250 and credit
Petty Cash $250
B.
Debit Miscellaneous
Expense $250 and credit Cash
$250
C.
Debit Petty Cash $250 and
credit Miscellaneous Expense
$250
D.
Debit Petty Cash $250 and
credit Cash $250
6.
Timothy wants to replenish the
$300 petty cash fund. He has receipts for
the following total payments: postage
(Office Expense), $35; supplies, $25; and
repairs, $95. A cash count shows $160 in
the petty cash box. What is the correct
journal entry to record the transaction?
A.
Debit Repair Expense $95,
debit Office Expense $35, debit
Supplies $25 and credit Cash $155
B.
Debit Repair Expense $95,
debit Office Expense $35, debit
Supplies $25 and credit Petty
Cash $155
C.
Debit Repair Expense $95,
debit Office Expense $35, debit
Supplies $25, and credit cash
$140, credit Cash Short and Over
$15
D.
Debit Repair Expense $95,
debit Office Expense $35, debit
Supplies $25, debit Cash Short
and Over $5, and credit cash $160
8.
Emily wants to replenish the $300
petty cash fund. She has receipts for the
following total payments: supplies, $55;
and repairs, $35. A cash count shows
$195 in the petty cash box. What is the
correct journal entry to record the
transaction?
A.
Debit Repair Expense $35,
debit Supplies $55 and credit Cash $90
B.
Debit Repair Expense $35,
debit Supplies $55 and credit Petty Cash
$90
C.
Debit Repair Expense $35,
debit Supplies $55, and credit Cash $90,
credit Cash Short and Over $15
D.
Debit Repair Expense $35,
debit Supplies $55, debit Cash Short and
Over $15, and credit Cash $105
7.
Michelle wants to replenish the
$300 petty cash fund. She has receipts
for the following total payments: postage
(Office Expense), $40; supplies, $25; and
repairs, $45. A cash count shows $175 in
the petty cash box. What is the correct
journal entry to record the transaction?
A.
Debit Repair Expense $45,
debit Supplies $25, debit Office
Expense $40 and credit Cash
$110
B.
Debit Repair Expense $45,
debit Supplies $25, debit Office
Expense $40 and debit Cash Short
and Over $15, and credit Cash
$125
C.
Debit Repair Expense $45,
debit Supplies $25, debit Office
Expense $40 and credit Cash
$110, credit Cash Short and Over
$15
D.
Debit Repair Expense $45,
debit Supplies $25, debit Office
Expense $40 and credit Petty
Cash $110
9.
Steve wants to replenish the $200
petty cash fund. He has receipts for the
following total payments: supplies, $18;
and repairs, $32. A cash count shows
$145 in the petty cash box. What is the
correct journal entry to record the
transaction?
A.
Debit Repair Expense $32,
debit Supplies $18, debit Cash
Short and Over $5, and credit
Cash $55
B.
Debit Repair Expense $32,
debit Supplies $18 and credit Petty
Cash $50
C.
Debit Repair Expense $32,
debit Supplies $18, and credit
Cash $60, credit Cash Short and
Over $5
D.
Debit Repair Expense $32,
debit Supplies $18 and credit Cash
$50
10.
Daniel wants to replenish the $250
petty cash fund. He has receipts for the
following total payments: postage, $34;
and repairs, $76. A cash count shows
$100 in the petty cash box. What is the
correct journal entry to record the
transaction?
A.
Debit Repair Expense $76,
debit Office Expense $34 and
credit Cash $110
B.
Debit Repair Expense $76,
debit Office Expense $34 and
credit Petty Cash $110
C.
Debit Repair Expense $76,
debit Office Expense $34, and
credit Cash $110, credit Cash
Short and Over $40
D.
Debit Repair Expense $76,
debit Office Expense $34, debit
Cash Short and Over $40, and
credit Cash $150
11.
Joseph wants to replenish the
$150 petty cash fund. He has receipts for
the following total payments: supplies,
$75; and repairs, $43. A cash count
shows $40 in the petty cash box. What is
the correct journal entry to record the
transaction?
A.
Debit Repair Expense $43,
debit Supplies $75 and credit Cash
$118
B.
Debit Repair Expense $43,
debit Supplies $75 and credit Petty
Cash $118
C.
Debit Repair Expense $43,
debit Supplies $75, and credit cash
$110, credit Cash Short and Over
$8
D.
Debit Repair Expense $43,
debit Supplies $75, debit Cash
Short and Over $8, and credit
Cash $126
12.
Jessica wants to replenish the
$200 petty cash fund. She has receipts
for the following total payments: supplies,
$85; and repairs, $55. A cash count
shows $75 in the petty cash box. What is
the correct journal entry to record the
transaction?
A.
Debit Repair Expense $55,
debit Supplies $85 and credit Cash
$140
B.
Debit Repair Expense $55,
debit Supplies $85 and credit Petty
Cash $140
C.
Debit Repair Expense $55,
debit Supplies $85, and credit
Cash $125, credit Cash Short and
Over $15
D.
Debit Repair Expense $55,
debit Supplies $85, debit Cash
Short and Over $15, and credit
Cash $155
4.03 -- Apply procedures to complete payroll records and prepare related
journal entries.
Textbook Chapters: 12 & 13
I.
II.
III.
IV.
Procedure for Preparing and Recording a Payroll (Use a Payroll Register to record the
following information.)
a. A.
Calculate employee hours. If hours are over 40 per week, overtime earnings
must be calculated.
b. Calculate regular earnings. Multiply hours worked up to 40 by hourly rate of pay.
c. If hours are over 40, calculate overtime earnings. Multiply hours over 40 by hourly pay
rate times 1 ½.
d. Calculate total earnings by adding regular earnings and overtime earnings.
e. Calculate deductions.
i. Social Security tax withholding (multiply total earnings by 6.2%)
ii. Medicare tax withholding (multiply total earnings by 1.45%)
iii. Federal income tax withholding (use federal tax tables)
iv. State income tax withholding (use state rate or state tax tables)
v. Other deductions – some employers will have other deductions such as health
insurance, etc.
f. Calculate total deductions. (Add all deductions together).
g. Calculate net pay. (Subtract total deductions from total earnings).
h. Prepare payroll checks. (Write checks for net pay amount.)
Procedure for Journalizing a Payroll
a. Total all columns of the Payroll Register. Prove register by checking totals across for
accuracy.
b. Write the date in the Date column of the General Journal.
c. Debit Salary Expense for the total earnings amount.
d. Credit appropriate liability accounts for the deductions.
i. Credit Social Security Tax Payable for the total Social Security tax withholding.
ii. Credit Medicare Tax Payable for the total Medicare tax withholding.
iii. Credit Federal Income Tax Payable for the total federal income tax withholding.
iv. Credit State Income Tax Payable for the total state income tax withholding.
v. Credit any other appropriate liabilities for other deductions.
e. Credit Cash for the total net pay amount.
f. Post the entry to the appropriate general ledger accounts.
Procedure for Calculating Employer Payroll Taxes
a. Social Security tax – Multiply total earnings by 6.2%. (Employers pay the same amount
of Social Security tax as employees.)
b. Medicare tax – Multiply total earnings by 1.45%. (Employers pay the same amount of
Medicare tax as employees)
c. Unemployment taxes
i. Federal unemployment tax – 0.8% of the first $7,000.00 earned by each
employee
1. The actual federal rate used for calculating federal unemployment tax is
6.2% of the first $7,000.00 earned by each employee.
2. Employers can receive a credit up to 5.4% of taxable earnings for the
amounts paid for state unemployment tax, which results in the 0.8%.
ii. State unemployment tax – rates and tax bases vary based on the state.
Procedure for Journalizing Employer Payroll Taxes
a. Write the date in the Date column of the General Journal.
V.
VI.
VII.
b. Debit Payroll Taxes Expense for the total of the employer’s Social Security, Medicare,
federal unemployment, and state unemployment taxes.
c. Credit the appropriate liability accounts.
i. Credit Social Security Tax Payable for the employer’s Social Security tax
amount.
ii. Credit Medicare Tax Payable for the employer’s Medicare tax amount.
iii. Credit Federal Unemployment Tax Payable for the federal unemployment tax
amount.
iv. Credit State Unemployment Tax Payable for the state unemployment tax
amount.
v. Post the entry to the appropriate general ledger accounts.
Procedure for Journalizing the Payment of Social Security, Medicare, and Federal Income
Taxes
a. Write the date in the Date column of the Cash Payments Journal.
b. Debit the appropriate tax liability accounts.
i. Debit Social Security Tax Payable for the amount of Social Security tax paid.
(Employer and Employee)
ii. Debit Medicare Tax Payable for the amount of Medicare tax paid. (Employer and
Employee)
iii. Debit Federal Income Tax Payable for the amount of federal income tax paid.
(Employees)
iv. Credit Cash for the total of the taxes paid.
c. Post the entry to the appropriate general ledger accounts.
Procedure for Journalizing Payment of Federal Unemployment Taxes
a. Write the date in the Date column of the Cash Payments Journal.
b. Debit Federal Unemployment Tax Payable for the amount of federal unemployment tax
paid.
c. Credit Cash for the amount of federal unemployment tax paid.
d. Post the entry to the appropriate general ledger accounts.
Procedure for Journalizing Payment of State Unemployment Taxes
a. Write the date in the Date column of the Cash Payments Journal.
b. Debit State Unemployment Tax Payable for the amount of state unemployment tax paid.
c. Credit Cash for the amount of state unemployment tax paid.
d. Post the entry to the appropriate general ledger accounts.
KEY TERMS
Preparing Payroll
•Payroll
•Salary
•Pay period
•Payroll clerk
•Gross earnings
•Hourly wage
•Time card
•Commission
•Piece rate
•Overtime rate
•Deduction
•Withholding
allowance
•Form W-4
•Social Security tax
•Medicare tax
Payroll Taxes
•Salaries Expense
•Unemployment taxes
•Federal
unemployment taxes
•State unemployment
taxes
•Payroll Tax Expense
•Federal Tax Deposit
Coupon (Form 8109)
•Electronic Federal
Tax Payment System
(EFTPS)
•Form W-2
•Form W-3
•Form 941
•Form 940
•Tax base
•Payroll register
•Net pay
4.03 Sample Questions
•Employee earnings
record
•Accumulated
earnings
Please use the following situation for questions 1 through 2:
Sneaker's Grill pays its employees weekly. Taxes are withheld based on the following
percentages. Federal Income Tax withholding is calculated using the IRS Tax Tables.
Social Security Withholding: 6.20%
Medicare Withholding: 1.45%
Federal Income Tax Withholding: Tax Withholding Tables
State Income Tax Withholding: 6.50%
Employee Name
Marital Status
Allowances
Gross Pay
Sally Smith
M
0
$425.00
Kevin Coffey
S
1
$600.00
1.
In FIGURE 4.03 C, what is the
Social Security withholding for Sally?
A.
$263.50
B.
$26.35
C.
$2.63
D.
$0.26
3.
Greg has gross earnings of
$245.00, Social Security withholding of
$15.19, Medicare withholding of $3.55,
federal income tax withholding of $50.00,
and state income tax withholding of
$15.93. What are Greg's total
deductions?
A.
$34.67
B.
$68.74
C.
$84.67
D.
$160.33
4.
Sports Incorporated has employer
payroll taxes as follows: Social Security
Tax $225.00, Medicare Tax $125.00 and
Federal Unemployment Tax $55.00. What
is the entry to record the employer's
payroll taxes?
A.
Debit Payroll Tax Expense
$405.00, Social Security Tax
Payable $225.00; credit Medicare
Tax Payable $125.00, Federal
Unemployment Tax Payable
$55.00
2.
In FIGURE 4.03 C, what is the
Social Security withholding for Kevin?
A.
$3.72
B.
$37.00
C.
$37.20
D.
$372.00
B.
Debit Payroll Tax Expense
$405.00; credit Cash $405.00
C.
Debit Payroll Tax Expense
$405.00; credit Social Security Tax
Payable $225.00, Medicare Tax
Payable $125.00, Federal
Unemployment Tax Payable
$55.00
D.
Debit Social Security Tax
Payable $225.00, Medicare Tax
Payable $125.00, Federal
Unemployment Tax Payable
$55.00; credit Payroll Tax Expense
$405.00
5.
WKRP Broadcasting paid state
unemployment taxes of $95.00. What is
the entry to journalize the payment of the
unemployment taxes?
A.
Debit Cash $95.00; credit
State Unemployment Tax Payable
$95.00
B.
Debit Payroll Tax Expense
$95.00; credit Cash $95.00
C.
Debit State Unemployment
Tax Payable $95.00; credit Cash
$95.00
D.
Debit State Unemployment
Tax Payable $95.0; credit Payroll
Tax Expense $95.00
6.
Watauga Office Supply paid state
unemployment taxes of $168.00. What is
the entry to journalize the payment of the
unemployment taxes?
A.
Debit Cash $168.00; credit
State Unemployment Tax Payable
$168.00
B.
Debit Payroll Tax Expense
$168.00, credit Cash $168.00
C.
Debit State Unemployment
Tax Payable $168.00, credit Cash
$168.00
D.
Debit State Unemployment
Tax Payable $168.00, credit
Payroll Tax Expense $168.00
Please use the following situation for this question.
Alison's Fresh Market has the following payroll information for their weekly pay period.
Name
Time
Worked
Rate of Pay
Commission %
Sales
Mark
55 hours
$15.00
2%
$7,000.00
Nick
35 hours
$10.00
2%
$5,750.00
Daniel
48 hours
$9.00
N/A
N/A
Alison
1 week
$85,000.00/year N/A
N/A
FIGURE 4.03 B
7.
In FIGURE 4.03 B, what are Nick's gross earnings for the pay period?
A.
$115.00
B.
$350.00
C.
$465.00
D.
$680.00
8.
John's Seafood has $1,500.00 in wages, $93.00 in Social Security withholding,
$21.75 in Medicare withholding, $200.00 in federal income tax withholding, and $80.00 in
state income tax withholding. What is the correct entry for recording the company's
payroll?
A.
Debit Salary Expense $1,500.00, Social Security Tax Payable $93.00,
Medicare Tax Payable $21.75, Federal Income Tax Payable $200.00, State Income
Tax Payable $80.00; credit Cash $1,105.25
B.
Debit Salary Expense $1,500.00; credit Social Security Tax Payable $93.00,
Medicare Tax Payable $21.75, Federal Income Tax Payable $200.00, State Income
Tax Payable $80.00, Cash $1,105.25
C.
Debit Social Security Tax Payable $93.00, Medicare Tax Payable $21.75,
Federal Income Tax Payable $200.00, State Income Tax Payable $80.00; credit
Salary Expense $1,500.00, Cash $1,105.25
D.
Debit Wages Expense $1,500.00, Cash $1,105.25; credit Social Security Tax
Payable $93.00, Medicare Tax Payable $21.75, Federal Income Tax Payable
$200.00, State Income Tax Payable $80.00
Carson's Candy Shoppe has $2,000.00 in wages, $124.00 in Social Security withholding,
$29.00 in Medicare withholding, $500.00 in federal income tax withholding, and $100.00 in
state income tax withholding. The federal unemployment tax rate is 0.8%.
9.
What is the employer's Social Security tax amount for the pay period?
A.
$ 12.40
C.
$153.00
B.
$124.00
D.
$248.00
Please use the following situation for this question.
Alison's Fresh Market has the following payroll information for their weekly pay period.
Name
Time
Worked
Rate of Pay
Commission %
Sales
Mark
55 hours
$15.00
2%
$7,000.00
Nick
35 hours
$10.00
2%
$5,750.00
Daniel
48 hours
$9.00
N/A
N/A
Alison
1 week
$85,000.00/year N/A
N/A
FIGURE 4.03 B
10.
In FIGURE 4.03 B, what are Alison's gross earnings for the pay period?
A.
$1,630.14
B.
$1,634.62
C.
$1,770.83
D.
$7,083.33
11.
Brandon worked 7 hours on Monday, 8 hours on Tuesday, 10 hours on Wednesday,
9 hours on Thursday, 10 hours on Friday, and 4 hours on Saturday. Brandon's rate of pay
is $12 per hour. Calculate Brandon's regular, overtime and total hours for the week.
A.
30 Regular Hours, 18 Overtime Hours, and 48 Total Hours
B.
35 Regular Hours, 13 Overtime Hours, and 48 Total Hours
C.
40 Regular Hours, 8 Overtime Hours, and 48 Total Hours
D.
48 Regular Hours, No Overtime Hours, and 48 Total Hours
Please use the following situation for questions 12 through 13:
Sneaker's Grill pays its employees weekly. Taxes are withheld based on the following
percentages. Federal Income Tax withholding is calculated using the IRS Tax Tables.
Social Security Withholding: 6.20%
Medicare Withholding: 1.45%
Federal Income Tax Withholding: Tax Withholding Tables
State Income Tax Withholding: 6.50%
Employee Name
Marital Status
Allowances
Gross Pay
Sally Smith
M
0
$425.00
Kevin Coffey
S
1
$600.00
12.
What is the state income tax
withholding for Kevin?
A.
$.0.39
B.
$3.90
C.
$39.00
D.
$390.00
13.
What is the state income tax
withholding for Sally?
A.
$0.28
B.
$2.76
C.
$27.63
D.
$276.30
Please use the following situation for questions 14 through 15:
Alison's Fresh Market has the following payroll information for their weekly pay period.
Name
Time
Worked
Rate of Pay
Commission %
Sales
Mark
55 hours
$15.00
2%
$7,000.00
Nick
35 hours
$10.00
2%
$5,750.00
Daniel
48 hours
$9.00
N/A
N/A
Alison
1 week
$85,000.00/year N/A
N/A
14.
What are Mark's gross earnings for
the pay period?
A.
$740.00
B.
$825.00
C.
$937.50
D.
$1,077.50
15.
What are Daniel's gross earnings
for the pay period?
A.
$360.00
B.
$432.00
C.
$468.00
D.
$612.00
4.00 Sample Questions Answer Key
4.01
4.02
4.03
1. B
2. C
3. C
4. B
5. D
6. C
7. C
1. C
2. C
3. A
4. C
5. D
6. C
7. B
8. D
9. A
10. D
11. C
12. C
1. B
2. C
3. C
4. C
5. C
6. C
7. C
8. B
9. B
10. B
11. C
12. C
13. C
14. D
15. C