INTERMEDIATE ACCOUNTING 2 Pre-finals 2

MULTIPLE CHOICE - SELECT THE BEST ANSWER

CURRENT LIABILITIES
C 1 Among the current liabilities, this represents expenses already incurred but not yet paid
A. Deferred revenue C. Accrued expenses
B. Contingent liability D. Warranty expense

B 2 The other term for No. 1 answer

A. Deferred revenue C. Contingent liability
B. Accrued liability D. Warranty expense

D 3 The foundation of internal control over payroll is:

A. Paying the correct amount of payroll tax C.
B. Accurately computing gross pay, deductions D.
C. Filing government forms on time
D. Separating payroll duties

US POINT OF VIEW:

PROBLEM 1
A clothing store, employs one salesperson. His straight time salary is $360 per week,
with time and half pay for hours above 40 per week

The clothing store withelds income tax of 11% and Social Security (FICA) tax of 8% from the
employee;

The clothing store also pays the following:

FICA tax 8%
State unemployment tax 5.4%
Federal unemployment tax 0.8%
Pension plan 10%

During the week ended, December 26, 20x20, the employee worked 48 hours. Prior to this
week, the employee had earned $ 5,470

A 4 The gross compensation of the employee would be:

A. $ 468 B. $ 369 C. $ 432 D. $ 360
Computations:
360+ (13.50×8 ) = 468
360/40 × 1.5 = 13.50

D 5 The total amount witheld by the clothing store

A. $ 70.11 B. $ 82.08 C. $ 68.40 D. $ 88.92
Computations:
19% × 468 = $ 88.92

B 6 The total amount of payroll tax expenses shouldered by the clothing store?
A. $ 50.40 B. $ 66.45 C. $ 61.34 D. $ 113.26
Computations:
14.20 × 468 = $ 66.45

C 7 The total remittance to the government

A. $ 183.37 B. P 195.34 C. $ 155.37 D. P 181.66
Computations:
ER = 66.45; EE = 88.92
Total $ 155.37

A 8 The amount to be deposited to the Employee's Pension Fund

A. $ 46.80 B. $ 36.90 C. $ 43.20 D. $ 36
Computations:
Pension fund 10% x 468 46.80
 A 9 How much is the total Salaries and Employee Benefits expense shouldered by the
clothing store?
A. P 581.25 B. $ 476.01 C. $ 557.28 D. $ 464.40
Computations:
468 + 66.45 + 46.80 = $581.25

D 10 The foundation of internal control over payroll is:

A. Paying the correct amount of payroll tax
B. Accurately computing gross pay, deductions and net pay
C. Filing government forms on time
D. Separating payroll duties

10x2 = 20/20

PH POINT OF VIEW

PROBLEM 2
The employee is the Manager at a food chain with a monthly salary of P 33,000 a month
is working on a graveyard shift;

His regular working days is 40 hours per week;

He has no overtime pay since he is the Manager, but the company pays him night
differential;

The payroll period is Dec. 1-15, deductions is for SSS and PH only

and for the period Dec. 16-31, deductions is for Wtax and HDMF only plus any advances
made by the employee. From Dec. 1-31, advances made by the employee is P 1,000 pesos

B 1 The gross compensation of the employee for Dec. 1-15 payroll

A. P 16,757 B. P 17,757 C. P 16,557 D. None of these
Computations:
16,500 + 1,257 = 17,257

Hourly rate = 396,000/2,080

190.385

1,257 = 190.385 × 10% × 6 × 11

A 2 The total deductions of the employee for Dec. 1-15 payroll

A. P 2,445 B. P 3,445 C. P 3,245 D. None of these
Computations:
SSS = 1,125
PH = 1,320
Total = 2,445

D 3 The journal entry to record the Dec. 1-15 payroll Debit Credit
A. Salaries expense 16,757.00
SSS contributions payable 2,125.00
PH contributions payable 1,320.00
Cash 13,312.00

B. Salaries expense 17,757.00

SSS contributions payable 2,125.00
PH contributions payable 1,320.00
Cash 14,312.00

C. Salaries expense 16,557.00

SSS contributions payable 2,125.00
 PH contributions payable 1,320.00
Cash 13,112.00

D. None of these
Salaries expense 17,757.00
SSS contributions payable 1,125.00
PH contributions payable 1,320.00
Cash 15,312.00

B 4 The gross compensation of the employee for Dec. 16-31 payroll

A. P 16,757 B. P 17,757 C. P 16,557 D. None of these
Computations:
16,500 + 1,257 = 17,757

D 5 The total deductions of the employee for Dec. 1-15 payroll

A. P 2,700 B. P 3,160 C. P 4.160 D. None of these
Computations:

A 6 The journal entry to record the Dec. 16-31 payroll Debit Credit
A. Salaries expense 17,757.00
Witholding tax payable 2,500.00
HDMF contributions payable 200.00
Advances to employees 1,000.00
Cash 14,057.00

B. Salaries expense 16,757.00

Witholding tax payable 2,500.00
HDMF contributions payable 200.00
Advances to employees 1,000.00
Cash 13,057.00

C. Salaries expense 16,557.00

Witholding tax payable 2,500.00
HDMF contributions payable 200.00
Advances to employees 1,000.00
Cash 12,857.00

D. None of these

5489 7 Compute the tax witheld of an employee with a Monthly Salary of P 53,455
Computations:
5,489
at 54,455
33,000
21,955 × 25% = 5,488.75
3280 8 Compute the SSS of an employee with a Monthly Salary of P 53,455
Computations:
ER = 2,155 Total = 3,280
EE = 1,125
2138 9 Compute the PH of an employee with a Monthly Salary of P 53,455
Computations:
2,138.20
53455 × 4% = 2,138.20
3200 10 Assuming the employer and the employee are both willing to pay the 2% of salary as HDMF
contributions, compute the HDMF of both the ER and the EE, with a monthly salary of P 53,455
Computations:
3,200
10x2 = 20/20 53,455 × 2% = P 1,069.10 each