Question 1

Janet is a salaried salesperson with a bonus incentive plan for sales above her sales quota.
Her quota for sales is $1,000,000 per year. She earns 5% on all sales above this quota. In
2020, her yearly sales were $2,000,000 with a base salary of $75,000 per year. 
What are her total yearly earnings?
$125,000

$100,000

$175,000

$75,000

Solution: 1M x 5% +75k = 125k

Question 2
Timothy has chosen to utilize the parking garage located close to the office. The cost per
month is $350 but the employer receives and passes along discounted rates to their
employees that reduce the cost per month to $290.
What amount will be taxable to Timothy on a monthly basis?
$350

$20

$270

$290
Question 3
What is the HSA catch-up contribution limit for an employee who is 58 years old and married?
$1,000

$3,600

$1,050

$7,200

Question 4
Employee 401(K) deferrals are subject to which taxes?
Social Security, Medicare, and FUTA taxes

Social Security and Medicare taxes

Federal Income, Social Security, and Medicare taxes

Federal Income, Social Security, Medicare, and FUTA taxes

500

250

150

Question 6
Angie’s Auto Repair outsources uniform cleaning and employees pay for the service.
Angie’s have set up a system for the actual weekly cost of cleaning to be deducted from
the employees’ paychecks. 
What is part of the process?
Employee must sign an authorization for the weekly payroll deduction

Employer must have a written policy that applies fairly to all workers in order to
deduct the fee pre-tax

Employee cannot opt out of this required payroll deduction

Employee who has missed pick-up day can clean his uniforms at home but will still
be subject to the cleaning-fee deduction
Question 7
Which 2 garnishments are required and not voluntary?
Child support

Employer advance repayment

Health insurance

Default student loans

Retirement plans

Question 8
On which form would you report federal unemployment taxes?
Form 940

Form 941
 Form 944

Form 1040

Question 9
How are penalties for failure to make timely deposits calculated?
A flat rate of 10% for late deposits

7% of undeposited amounts with a maximum of $50,000

25% of the undeposited amounts with a maximum of $250,000

A four-tiered penalty based on the number of days the deposit is late

7
Question 11
Smith Heat and Air Inc. are going out of business. They plan to box up all employee,
wage, and payroll tax records and place them in secure storage. 
How long must they keep the boxes?
4 years after all returns for the final calendar year have been filed per IRS
requirements

1 year after the final payroll has been filed per EEOC guidelines

7 years after the final payroll per FLSA guidelines

3 years after all returns for the final calendar year have been filed per ADEA
requirements

Question 12
Tim’s Tires accrues payroll to have the most accurate financial reports possible. 
Which scenario would require a payroll accrual at the end of the month?
Company’s employees were paid on July 5 for their hours worked from June 14
—July 3rd. The company will need to accrue the amounts that the employees earned
for the days through June 30

Company’s employees were paid on June 30th for their hours worked from June 16—
June 30. The company will need to accrue the amounts that the employees earned for the
days through June 30
 Company’s employees were paid on June 30 for their hours worked from June 1—
June 30. The company will need to accrue the amounts that the employees earned for the
days through June 30

Company’s employees were paid on July 5 for their hours worked from June 14—
July 3rd. The company will need to accrue the amounts that the employees earned for the
days worked in July

Question 13
ABC Company is required to report unused paid time off as of the end of the accounting
period. 
How would they record the paid time off earned and not yet used?
Create a journal entry to debit PTO other current liability and credit payroll expenses

Adjust the PTO hours available for each worker to zero as of the last day of the
accounting period

Create a journal entry to debit payroll expenses and credit PTO other current
liability

Create a check for the PTO to be delivered to each worker when they use the hours

Question 14
Pastor Judy received the following in 2020:
Base salary: $25,000 
Housing allowance: $9,000 
Car allowance: $2,500 
SECA Allowance: $6,000 
Accountable reimbursement business expenses: $1,500
What is the total amount of gross wage (Box 1)?
$25,000

$44,000
 $42,500

$33,500

Solution: 25k+2.5k+6k = 33.5k

Question 15
An employee, Stephanie, uses a car owned by your company. In 2021, Stephanie drives
35,000 miles. Of those, 7,000 are personal miles.
Fair market value of the car is $20,000
Annual lease value is $5,600
What is the fair market value of Stephanie’s personal use?
$5,600

$1,120

$3,920

$1,500

Review Answers
Take a minute to review your answers before you turn in your work.
Once you submit this section, you won’t be able to change your answers.
 Q1
 What are her total yearly earnings?

Edit answer

Your answer:
$125,000

 Q2
 What amount will be taxable to Timothy on a monthly basis?

Edit answer

Your answer:
$290

 Q3
 What is the HSA catch-up contribution limit for an employee who is 58 years old
and married?

Edit answer

Your answer:
$1,000

 Q4
 Employee 401(K) deferrals are subject to which taxes?

Edit answer

Your answer:
Social Security, Medicare, and FUTA taxes

 Q5
 What is the threshold for the number of W-2s in a year that would require the
employer to report the aggregate cost of employer-sponsored health coverage on their
employees’ Forms W-2?

Edit answer

Your answer:
250
 Q6
 What is part of the process?

Edit answer

Your answer:
Employee must sign an authorization for the weekly payroll deduction

 Q7
 Which 2 garnishments are required and not voluntary?

Edit answer

Your answer:
Child support
Default student loans

 Q8
 On which form would you report federal unemployment taxes?

Edit answer

Your answer:
Form 940

 Q9
 How are penalties for failure to make timely deposits calculated?

Edit answer

Your answer:
A four-tiered penalty based on the number of days the deposit is late

 Q10
 For how many years must an employer retain copies of the Form 940?

Edit answer

Your answer:
4

 Q11
 How long must they keep the boxes?
 Edit answer

Your answer:
4 years after all returns for the final calendar year have been filed per IRS requirements

 Q12
 Which scenario would require a payroll accrual at the end of the month?

Edit answer

Your answer:
Company’s employees were paid on July 5 for their hours worked from June 14—July
3rd. The company will need to accrue the amounts that the employees earned for the days
through June 30

 Q13
 How would they record the paid time off earned and not yet used?

Edit answer

Your answer:
Create a journal entry to debit payroll expenses and credit PTO other current liability

 Q14
 What is the total amount of gross wage (Box 1)?

Edit answer

Your answer:
$33,500

 Q15
 What is the fair market value of Stephanie’s personal use?

Edit answer

Your answer:
$1,120
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