Assume the following data for Blossom Care Dry Cleaning for the year ended December 31. • Gross earnings $305,000.00 • All employees’ salaries are greater than $7,000 in the first quarter of employment • Number of employees at the beginning of the year: 10 • One new employee hired during fourth quarter (assume employee earns $7,800 before December 31) • FUTA deposits for the year: $420.00 (a) Determine the amounts entered on Form 940 for the following line items. Line 3: Total payments to all employees $ Line 4: Payments exempt from FUTA tax $ Line 5: Total of payments made to each employee in excess of $7,000 $ Line 7: Total taxable FUTA wages $ Line 8: FUTA tax before adjustments $ Line 13: FUTA tax deposited for the year, including any overpayment applied from a prior year $ Line 14: Balance due $ Line 15: Overpayment $ Line 16a: 1st quarter $ Line 16b: 2nd quarter $ Line 16c: 3rd quarter $ Line 16d: 4th quarter $ Line 17: Total tax liability for the year
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
| • | Gross earnings $305,000.00 | |
| • | All employees’ salaries are greater than $7,000 in the first quarter of employment | |
| • | Number of employees at the beginning of the year: 10 | |
| • | One new employee hired during fourth quarter (assume employee earns $7,800 before December 31) | |
| • | FUTA deposits for the year: $420.00 |
(a)
| Line 3: Total payments to all employees | $ | |
| Line 4: Payments exempt from FUTA tax | $ | |
| Line 5: Total of payments made to each employee in excess of $7,000 | $ | |
| Line 7: Total taxable FUTA wages | $ | |
| Line 8: FUTA tax before adjustments | $ | |
| Line 13: FUTA tax deposited for the year, including any overpayment applied from a prior year | $ | |
| Line 14: Balance due | $ | |
| Line 15: Overpayment | $ | |
| Line 16a: 1st quarter | $ | |
| Line 16b: 2nd quarter | $ | |
| Line 16c: 3rd quarter | $ | |
| Line 16d: 4th quarter | $ | |
| Line 17: Total tax liability for the year |
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