Mr. Calkins

Accounting I

Spring 2008

REVIEW FOR FINAL EXAM CHAPTERS 12-17

Part I Payroll and Salary Expense:

  1. What is the difference between a salary and a wage?
  2. Why do some businesses pay their employees on a commission basis?
  3. List the three federal taxes that businesses are required to withhold from employees’ wages?
  4. List three factors that determine the amount of federal income tax withheld from employee earnings each pay period:
  5. What are some common voluntary deductions that are withheld from employee payroll checks?
  6. State and federal unemployment taxes are percentages of what amount?
  7. The debit to Payroll Tax Expense is the total of what amounts?
  8. What payroll taxes are deposited monthly in a Federal Reserve Bank or other authorized financial institution?
  9. When does an employee receive a Form W-2?
  10. Explain how different copies of Form W-2 are distributed.
  11. What information is reported on Form W-2?
  12. What is the difference between a Form 940 and Form 941?

Part II Payroll and Salary Expense:

Determining Payroll & Wage Earning Sheets

Prepare an Excel spreadsheet based on the information provided to complete payroll for Wonder-Ware Computers Applications. Using the amounts below determine the amounts to be withheld from each employee’s gross earnings for FICA and income taxes. It is a weekly pay period, so use the tables provided to you to determine the amount of federal income tax to be withheld. The Federal Income tax %11, State income tax is 8% of gross earnings. The social security tax rate is 6.2%, and the Medicare tax rate is 1.45%. Use the format shown in your working papers.

Kevin Jumpstreet—Marital Status-S, Allowances-0 Gross Wages $155.60

William Tell—Marital Status—S, Allowances-1, Gross Wages $184.10

Cheech Marin—Marital Status—S, Allowances-0, Gross Wages $204.65

John Adams—Marital Status—M, Allowances-1, Gross Wages $216.40

Richard Sell—Marital Status—2, Allowances-2, Gross Wages $196.81

Part III Payroll and Salary Expense:

DIRECTION: Create a table in Excel for the weekly payroll ending July 29. Use the employee information below to create the spreadsheet. Categorize them alphabetically last name first. Be sure to show formulas for your work and an example is given attached at the end of these directions. Table Heading should have a 16 Bold Size font, Sub-Headings 11 Bold Size Font, Total column to be 11 Bold and underlined. All other fonts are to be size 10 non-bold. Examples are provided for you on the last two pages:

TAXES ARE CALCUALTED AS FOLLOWS

Social Security is %7.2, Medicare Tax %2.45, Federal Tax %12, State Tax %5,

EMPLOYEE INFORMATION

Daniel Boone—Marital (S),Allowance(1), Hours(22), Rate (7.10), Check #310

Thomas Jefferson—Marital (M), Allowance (2), Hours (42), Rate (8.30), Check #316

Greg Kimball—Marital (M), Allowance (2), Salary (542.50),Rate (8.30), Check #314

Jackie Munn—Marital (S), Allowance(1), Hours(34.5), Rate(7.40), Check #313

Jesse James—Marital(S), Allowance(0), Salary(250.00), Check #312

Heather Ripley—Marital(M), Allowance(3), Salary (725.00), Check #315

Christine Pristine—Marital(S), Allowance(0),Hours(36),Rate(8.30), Check #311

Patricia Wooley—Marital(S), Allowance(1), Salary(475.00), Check #317

Tom Tutone—Marital(M), Allowance(3),Hours(46.5),Rate(11.25), Check #320

Tune Fish—Martial(M), Allowance(1), Hours (48.00), Rate(9.75), Check #318

Bob Dylan—Marital(S), Allowance(1), Hours (37.50), Rate (7.85) Check #319

Ziggy Stardust—Marital (S), Allowance(0), Hours (52.25), Rate (9.35), Check #321

Part IV Payroll Taxes Salaries:

True or False

  1. ____ In a few states, employees are also required to pay unemployment taxes.
  2. ____ The Cash in Bank accounts debited for the amount the employees actually earn in the pay period.
  3. ____The only taxes that the employer must pay are unemployment taxes.
  4. ____The amount entered for Payroll Tax Expense is the total gross earnings of the pay period.
  5. ____The social security tax is paid by both employer and employees.
  6. ____Amounts deducted from employees’ earnings and held for payment by the employer become liabilities to the business.
  7. ____The entry for Salaries Expense is recorded each pay period, but the entry for Payroll Tax Expense is recorded only at the end of the year.
  8. ____When a business transfers money from its regular checking account to the payroll checking account, the check is written for the total net pay amount.
  9. ____An employer normally pays federal withholding taxes, social security taxes, and Medicare taxes once a year.
  10. ____The payroll register is the source of information for preparing the journal entry for payroll.

Part IV Sales & Cash Receipts:

A) Sales SlipB) Sale on AcctC) Cash DiscountD) Cash Receipt

E) Cash SaleF) Charge CustomerG) Controlling Acct.H) Sales Return

I) Credit CardJ) Credit MemoK) Credit TermsL) Inventory

M) Sales TaxN) MerchandisingO) Retailer

1) A business that buys goods and then sells those goods to customers for a profit is called a(n)____.

2)_ _A reduction in the sales price of an item that is given to a customer for prompt payment is a

______or ______.

3)____The customer to whom a sale on account is made is called a(n)______.

4)____A(n) ______occurs when a customer buys an item with a promise to pay for it later.

5) A business that sells to the final user is known as a ______.

6) Charge customers often use a(n)______when they make a purchase on account.

7) A levy imposed by most states on the retail sales price of goods and services is a(n)______.

8) Full credit or a cash refund granted by a merchant to a customer for unsatisfactory merchandise is

a(n)______.

9) Refers to the items of merchandise a business has in stock.

10) The balance of a(n)_____must agree with the balance of the accounts in related subsidiary

ledger.

11) A price reduction offered to a customer who keeps damaged or defect merchandise is a(n)______.

12)_ _ ______set out the time period for a customer to make full payment of an invoice.

13)_ ___A(n)______is a source document prepared by the seller to notify a charge customer the

customer’s account will be decreased by the amount of a return or allowance.

14) _ _A(n) refers to cash that is received by a business.

15) _ A(n)______is a form that lists the details of a sale: the date of the sale, the name of the

customer, and the description, quantity, and price of the goods sold.

Part V Sales Receipts Journal Entry

January 1) Sold on account to John Smith merchandise worth $1,800.00 plus sales tax of $97.50, Sales Slip 422.

7)Received a check from Thomas Wilfong to apply on account, $275.00, Receipt 523.

11) Issued Credit Memo 113 to John Smith for the return of merchandise originally sold on account, $150.00 plus sales tax of $7.50.

17)Sold Merchandise on account to Tell Enterprises, $2,400.00 plus $120.00 in sales taxes, Sales Slip 423. Credit terms were 2/10, n/30.

25)Revived a check for $1,000.00 from John Smith to apply on account, Receipt 524.

26)Received a check from Tom Wilfong. for $2,472.00 in payment of its account balance of $2,520.00 less a 2 percent cash discount of $48.00, Receipt 525.

28) Sold merchandise on account to EagleHigh School for $750.00, Sales Slip 424.

30) Cash sales for the period totaled $1,152.00 plus $57.60 in sales taxes, Tape 630.

30)Bankcard sales for the period totaled $4,594.00, plus sales taxes of $229.75, Tape 6

PART VI

Directions: Below are several purchases and cash payments and cash payments transactions of Camblel Home Furnishings. Create a general journal and record the transactions.

Transactions:

DEC1Paid to ARTZ Insurance $2,400.00 for the premium on a one-year insurance policy,

Check 445.

4Purchased merchandise on account from Best Inc., $2,300.00, Invoice 302, terms 2/10,

n/30.

7Issued Check 446 for $350.00 to Holliday Transport for shipping charges on merchandise purchased from Best Inc.

10Purchased desk supplies for cash, $125.00, Check 447.

13Issued Check 448 for $2,254.00 to QUEST Inc. for merchandise purchased on account, $2,300.00 less a cash discount of $46.00.

20Purchased a new computer on account from SMS Systems, $2,250.00, Invoice 0190, terms net 30.

24Received Invoice 149 from MICRON for merchandise purchased on account, $1,675.00, credit terms 1/10, n/45.

26Issued Debit Memo 101 to MICRON for $395.00 in defective merchandise returned.

30 Recorded bankcard fees of $177.50, October bank statement

PART VII

DIRECTIONS: Identify the letter of choice that bests completes the statement or answers that best fit selections.

A. Cash Receipts JournalB. FootingC. Sales Journal

D. Schedule A/RE. Special Journal

1. The ______is a special journal used to record only the sale of merchandise on account.

2. A ______is used for journalizing a specific kind of business transaction.

3. A is a column total written in small pencil figures.

4. All transactions involving incoming cash are recorded in the ______.

5. A ______lists all the accounts in the accounts receivable subsidiary ledger and balances.

DIRECTIONS: Answer with a T for True and F for False.

  1. An Account number in parentheses under a column total in a special journal indicates that the total has been posted to the general ledger account whose number is shown.
  2. Footings are always completed in pencil, and column totals are written in ink.
  3. A check mark in the posting reference column of the sales journal indicates that the transaction has been posted to the accounts receivable subsidiary ledger.
  4. When posting from the sales journal to the accounts receivable subsidiary ledger write the letter “S” plus the page number on which the transaction was recorded in the posting reference column of the subsidiary ledger account.
  5. When a special journal page is filled and there are additional transactions to record, write the phrase “Brought Forward” on the last line of the filled journal page.
  6. A cash sale of merchandise is recorded in the sales journal.
  7. The General Credit column in the cash receipts journal is used for recording credits to accounts for which there are no special amount columns.
  8. When cash sales and bankcard sales transactions are recorded in the cash receipts journal, a check mark is placed in the Posting Reference column to indicate the amounts are not to be posted individually.
  9. Proving the equality of debits and credits in the cash receipts journal does not prove the complete accuracy of the recorded transactions.
  10. A check mark under the double rule in the General credit column of the cash receipts journal indicates the column total is not posted anywhere.

PART VIII

RECORDING AND POSTING CASH PAYMENTS

DIRECTIONS: Peter Sellers Mart is a merchandising business located in Redwood, Calif. The

beginning balances of the accounts needed to finish the assignment are in the ledger accounts provided in your worksheet. Complete and do the following:

1)Record the transactions in the Cash Payments Journal

2)Post the individual amounts in the Accounts Payable Credit column on a daily basis to the creditor’s account.

3)Post the individual amounts in the General Debit and Credit columns on the date the transactions occurred.

4)Foot, prove, total and rule the cash payments journal.

5)Post the column totals at the end of the month.

6)Prepare a schedule of accounts payable.

7)Prove cash at the end of month. The beginning Cash in Bank balance was $10,000.00, cash receipts were $6,500.00 and ending check stub balance is $2,404.00.

8)At the end of the month what does Peter Seller’s Mart owe it’s creditors?