CPB / BookKeeping Payroll and Tax Reporting 5

Question 1

Which payroll journal entry correctly records the employer's share of FICA taxes?

Accepted Answer

Debit Payroll Tax Expense; Credit FICA Taxes Payable

Answer

The employer's share of FICA is recorded as a debit to Payroll Tax Expense and a credit to FICA Taxes Payable until remitted.

Question 2

What is the maximum penalty rate for failure to deposit payroll taxes when the failure exceeds 15 days past the due date?

Accepted Answer

10%

Answer

The IRS imposes a 10% penalty on payroll tax deposits that are more than 15 days late (or unpaid amounts remaining after an IRS notice).

Question 3

A bookkeeper discovers that $200 in Social Security taxes was under-withheld from an employee in Q1. Which form is used to correct this error?

Accepted Answer

Form 941-X

Answer

Form 941-X is the amended quarterly payroll tax return used to correct errors in previously filed Form 941s, including under-withheld FICA.

Question 4

Under the constructive receipt doctrine, when is a paycheck mailed on December 31 includible in the employee's taxable income?

Accepted Answer

In the year it is actually received and cashed

Answer

Under constructive receipt, income is taxable when it is made available; a mailed check is not available until received, so it is taxable in the year received.

Question 5

An employer operates in a state with a 5.4% SUTA rate on the first $7,000 of wages. What is the net FUTA tax per employee for the year?

Accepted Answer

$42.00

Answer

Net FUTA = 0.6% × $7,000 = $42.00 per employee, because the full 5.4% SUTA credit reduces the gross 6.0% FUTA rate to 0.6%.

CPB / BookKeeping Practice Test

CPB / BookKeeping Practice Test

CPB / BookKeeping Payroll and Tax Reporting 5