Accounting: Practical Practice Problems

The biweekly taxable wages for the employees of Rite-Shop follow.

3-8A
Ralph Henwood was paid salary of $64,600 during 2012 by Odesto Company. In addition, during the year Henwood started his own business as a public accountant and reported a net business income of $48,000 on his income tax return for 2012. Compute the following: a. OASDI $4005.20

HI $936.70
b. OASDI $5642.00
HI $1,392.00

3-12A
Refer to problem 3-11A. Complete 2,4, and 5 of form 941 for Cuz Company for the third quarter of 2012. Cruz Company is a monthly depositor with the following monthly tax liabilities for this quarter: July$7,193.10

August7,000.95
September7,577.78
State unemployment taxes are only paid to California. The company dose not use a third party designee and the tax returns are signed by the president, Carlos Cruz.

See attached document.

3-15A
The taxable wages and withheld taxes for Stafford Company(EIN 25-7901462), semiweekly depositor, for the first quarter of the follow. a. Compute schedule B of form 941 on page 3-48 for the first quarter for Steve Hazelton, the owner of Stafford company. See attachment

b. List the due dates of each deposit in the first quarter. Paydays| Deposit due dates|
January 13| January 14- January 16|
January 31| February 1-3|
February 15| February 16-18|
February 29| March 1-3|
March 15| March 16-18|
March 30| March31- April 2|

3-16A
Vulcan Company is a monthly depositor whose tax liability for March 2012 is $2,505.0 1. What is the due by the 15th of the next month
The deposit is due by the 15th of the next month
2. Assume that no deposit was made until May 5. Compute the following penalties:

Failure to Deposit Penalty Percentage Rates
Number of Days Late| Percentage rate underpayment| |
1-5| 2%| |
6-15| 5%| |
16 +| 10%| |
More than 10 days after first IRS bill| 15%| |

| Rate| Maximum|
Failure To File Penalty| 4.5% per month of unpaid tax| 22.5%| Failure To Pay Penalty| 1/2 % per month of tax, then 1% per month after Notice of Intent to Levy| 25%|

The interest rate is determined quarterly and is the federal short-term rate plus 3 percent. Interest is compounded daily. If you file a return but don’t pay all amounts shown as due on time, you’ll generally have to pay a late payment penalty of one-half of one percent of the tax owed for each month, or part of a month, that the tax remains unpaid from the due date, until the tax is paid in full or the 25% maximum penalty is reached. The one-half of one percent rate increases to one percent if the tax remains unpaid 10 days after the IRS issues a notice of intent to levy. For individuals who file by the return due date, the one-half of one percent rate decreases to one-quarter of one percent for any month in which an installment agreement is in effect.