Problem: Instructions: Place the best answer for each of the following questions in the blank at the left.
1. The interest charged by the bank, at the rate of 12%, on a 90-day, non-interest-bearing note payable for $75,000 is:
a. $1,000
b. $2,250
c. $3,000
d. $9,000
2. The cost of a product warranty should be included as an expense:
a. in the period of the sale of the product
b. in the period of the collection of the cash from the sale of the product
c. in the future period when the product is repaired or replaced
d. in the future period when the cost of repairing the product is paid
3. An employee's rate of pay is $8 per hour, with time and a half for hours worked in excess of 40 during a week. If the employee works 50 hours during a week and has social security tax withheld at a rate of 6.0%, Medicare tax withheld at a rate of 1.5%, and federal income tax withheld at a rate of 15%, the employee's net pay for the week is:
a. $440
b. $374
c. $341
d. $310
4. An employee receives an hourly rate of $18, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 45; federal income tax withheld, $350; cumulative earnings for year prior to current week, $49,700; social security tax rate, 6.0%; Medicare tax rate, 1.5%. What is the gross pay for the employee?
a. $475
b. $505
c. $720
d. $855
5. Prior to the last weekly payroll period of the calendar year, the cumulative earnings of employees A and B are $99,800 and $21,000, respectively. Their earnings for the last completed payroll period of the year are $1,000 each. The amount of earnings subject to
social security tax is $100,000, and the tax rate is 6%. All earnings are subject to Medicare tax at 1.5%. Assuming that the payroll will be paid on December 29, what will be the employer's total FICA tax (social security and Medicare) for this payroll period on the two salary amounts of $1,000 each?
a. $75
b. $90
c. $102
d. $150
6. Payroll taxes levied against employees become liabilities:
a. when earned by the employee
b. at the end of an accounting period
c. the first of the following month
d. at the time the liability for the employee's wages is paid
7. Which of the following items would not be considered a fringe benefit?
a. vacations
b. employee pension plans
c. health insurance
d. FICA benefits