Question 1

A company's employees had the following earnings records at the close of the current payroll period:
The company's payroll taxes expense on each employee's earnings includes: FICA Social Security taxes of 6.2% on the first $106,800 of earnings plus 1.45% FICA Medicare on all wages; 0.8% federal unemployment taxes on the first $7,000; and 2.5% state unemployment taxes on the first $7,000. Compute the employer's total payroll taxes expense for the current pay period.

Accepted Answer

The answer of A company's employees had the following earnings...

Question 2

A company sells its product subject to a warranty that covers the cost of parts for repairs during the six months after the date of sale. Warranty costs are estimated to be 6% of sales. During the month of June, the company performed warranty work and used $12,000 of parts to perform the warranty work. Sales for June were $450,000.
1. Record the warranty expense for the month of June.
2. Record the costs of the warranty work completed in June.
3. If the Estimated Warranty Liability account had a credit balance of $10,000 on May 31, what is the account balance at June 30?

Accepted Answer

The answer of A company sells its product subject to...

Question 3

A merit rating:

Accepted Answer

A)   Is assigned by the state.
B)   Reflects a company's stability or instability in employing workers.
C)   Adjusts the employer's SUTA tax rate.
D)   Affects state unemployment taxes paid by an employer.
E)   All of these.F) B) and D)
G) A) and D)

Question 4

A company's income before interest expense and taxes is $250,000 and its interest expense is $100,000. Its times interest earned ratio is:

Accepted Answer

A)   0.40
B)   2.50
C)   1:2.5
D)   2.5:1
E)   0.50F) A) and D)
G) A) and C)

Question 5

A note payable can be used to extend the payment due on an account payable.

Accepted Answer

A) True 
 B)False

Question 6

Agro Depot's income before interest expense and income taxes was $5,909 million, and interest expense was $37 million. Calculate Agro Depot's times interest earned.

Accepted Answer

The answer of Agro Depot's income before interest expense and...

Question 7

The times interest earned computation is:

Accepted Answer

A)   (Net income + Interest expense + Income taxes) /Interest expense.
B)   (Net income + Interest expense - Income taxes) /Interest expense.
C)   (Net income - Interest expense - Income taxes) /Interest expense.
D)   (Net income - Interest expense + Income taxes) /Interest expense.
E)   Interest expense/(Net income + Interest expense + Income taxes expense) .F) A) and B)
G) D) and E)

Question 8

A company sells computers with a 6-month warranty. In January, the company sold 100,000 computers at $1,750 each; and 1,500 computers were turned in for repairs during that same month. The total repairs amounted to $185,000 costs from the computer parts inventory. It is estimated that 2% of all units sold will need repairs under warranty at an estimated cost of $200 per unit. Prepare the journal entries to record (a) estimated warranty expense for January and (b) warranty repair costs for January.

Accepted Answer

The answer of A company sells computers with a 6-month...

Question 9

To compute the amount of tax withheld from an employee's pay, employers can use a _______________________________________________________ table.

Accepted Answer

Wage brack...

Question 10

The current FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both taxes are applied to the first $7,000 of an employee's pay. Assume that an employee earned $8,900. What is the amount of total unemployment taxes the employer must pay on this employee's wages?

Accepted Answer

A)   $322.00.
B)   $434.00.
C)   $480.60.
D)   $551.80.
E)   Zero, since the employee's wages exceed the maximum of $7,000.F) A) and B)
G) A) and C)

Question 11

Amounts received in advance from customers for future products or services:

Accepted Answer

A)   Are revenues.
B)   Increase income.
C)   Are liabilities.
D)   Are not allowed under GAAP.
E)   Require an outlay of cash in the future.F) B) and C)
G) None of the above

Question 12

All of the following statements regarding liabilities are except:

Accepted Answer

A)   A liability is a probable future payment of assets or services.
B)   Unearned future wages to be paid to employees should be recorded as liabilities.
C)   For a liability to be reported, it must be a present obligation that results from a past transaction or event, and requires a future payment of assets or services.
D)   Information about liabilities is more useful when the balance sheet identifies them as either current or long term.
E)   All of these are True.F) A) and B)
G) B) and E) B

Question 13

The full disclosure principle requires the reporting of contingent liabilities that are possible.

Accepted Answer

A) True 
 B)False

Question 14

A company's payroll for the week ended May 15 included earned salaries of $20,000. All of that week's pay is subject to FICA social security taxes of 6.2% and Medicare taxes of 1.45%. In addition, the company withholds the following amounts for this weekly pay period: $900 for medical insurance, $3,400 for federal income taxes, and $180 for union dues.
a. Prepare the general journal entry to accrue the payroll.
b. The company is subject to state unemployment taxes at the rate of 2% and federal unemployment taxes at the rate of 0.8%. By May 15, some employees had earned over $7,000, so only $9,000 of the $20,000 weekly gross pay was subject to unemployment tax. Prepare the general journal entry to accrue the employer's payroll tax expense.

Accepted Answer

The answer of A company's payroll for the week ended...

Question 15

Sales taxes payable:

Accepted Answer

A)   Is an estimated liability.
B)   Is a contingent liability.
C)   Is a current liability for retailers.
D)   Is a business expense.
E)   Is a long-term liability.F) B) and C)
G) D) and E)

Question 16

During August, Arena Company sells $356,000 in product that has a one year warranty. Experience shows that warranty expenses average about 5% of the selling price. The warranty liability account has a balance of $12,800 before adjustment. Customers returned product for warranty repairs during the month that used $9,400 in parts for repairs. The entry to record the estimated warranty expense for the month is:

Accepted Answer

A)   Debit Warranty Expense $17,800; credit Estimated Warranty Liability $17,800.
B)   Debit Warranty Expense $5,000; credit Estimated Warranty Liability $5,000.
C)   Debit Warranty Expense $14,400; credit Estimated Warranty Liability $14,400.
D)   Debit Estimated Warranty Liability $9,400; credit Warranty Expense $9,400.
E)   Debit Estimated Warranty Liability $17,800; credit Warranty Expense $17,800.F) A) and E)
G) B) and E)

Question 17

Blake Company pays its employees for two weeks vacation each year. The total annual cost of the vacation benefit is $113,000. Prepare the journal entry to record the weekly accrued vacation expense.

Accepted Answer

The answer of Blake Company pays its employees for two...

Question 18

The Wage and Tax Statement is:

Accepted Answer

A)   Form 940.
B)   Form 941.
C)   Form 1040.
D)   Form W-2.
E)   Form W-4.F) None of the above
G) A) and D)

Question 19

A company borrowed $60,000 by signing a 60-day, 10% note payable from its bank. Compute the total cash payment due on the note's maturity date.

Accepted Answer

At maturity: $60,000...

Question 20

Employers:

Accepted Answer

A)   Pay FICA taxes equal to the amount of FICA taxes withheld from the employees.
B)   Withhold employees' FICA taxes.
C)   Pay unemployment taxes to the federal government.
D)   Pay unemployment taxes to both the state and federal governments.
E)   All of these.F) C) and E)
G) A) and D) E

Exam 11: Current Liabilities and Payroll Accounting

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A merit rating:

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A company's income before interest expense and taxes is $250,000 and its interest expense is $100,000. Its times interest earned ratio is:

Correct Answer
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A note payable can be used to extend the payment due on an account payable.

Correct Answer
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Agro Depot's income before interest expense and income taxes was $5,909 million, and interest expense was $37 million. Calculate Agro Depot's times interest earned.

Correct Answer
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The times interest earned computation is:

Correct Answer
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Correct Answer
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To compute the amount of tax withheld from an employee's pay, employers can use a _______________________________________________________ table.

Correct Answer
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Wage brack...
View Answer

The current FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both taxes are applied to the first $7,000 of an employee's pay. Assume that an employee earned $8,900. What is the amount of total unemployment taxes the employer must pay on this employee's wages?

Correct Answer
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Amounts received in advance from customers for future products or services:

Correct Answer
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All of the following statements regarding liabilities are except:

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B

The full disclosure principle requires the reporting of contingent liabilities that are possible.

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Sales taxes payable:

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Blake Company pays its employees for two weeks vacation each year. The total annual cost of the vacation benefit is $113,000. Prepare the journal entry to record the weekly accrued vacation expense.

Correct Answer
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The Wage and Tax Statement is:

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A company borrowed $60,000 by signing a 60-day, 10% note payable from its bank. Compute the total cash payment due on the note's maturity date.

Correct Answer
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At maturity: $60,000...
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Employers:

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E

Exam 11: Current Liabilities and Payroll Accounting

Correct AnswerverifiedShow Answer

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A merit rating:

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A company's income before interest expense and taxes is $250,000 and its interest expense is $100,000. Its times interest earned ratio is:

Correct AnswerverifiedShow Answer

A note payable can be used to extend the payment due on an account payable.

Correct AnswerverifiedShow Answer

Agro Depot's income before interest expense and income taxes was $5,909 million, and interest expense was $37 million. Calculate Agro Depot's times interest earned.

Correct AnswerverifiedShow Answer

The times interest earned computation is:

Correct AnswerverifiedShow Answer

Correct Answerverified11eaaaf8_6df4_ea09_812b_b56c7e636de6_TB6309_00

To compute the amount of tax withheld from an employee's pay, employers can use a _______________________________________________________ table.

Correct AnswerverifiedWage brack...View AnswerShow Answer

The current FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both taxes are applied to the first $7,000 of an employee's pay. Assume that an employee earned $8,900. What is the amount of total unemployment taxes the employer must pay on this employee's wages?

Correct AnswerverifiedShow Answer

Amounts received in advance from customers for future products or services:

Correct AnswerverifiedShow Answer

All of the following statements regarding liabilities are except:

Correct AnswerverifiedB

The full disclosure principle requires the reporting of contingent liabilities that are possible.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Sales taxes payable:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Blake Company pays its employees for two weeks vacation each year. The total annual cost of the vacation benefit is $113,000. Prepare the journal entry to record the weekly accrued vacation expense.

Correct AnswerverifiedShow Answer

The Wage and Tax Statement is:

Correct AnswerverifiedShow Answer

A company borrowed $60,000 by signing a 60-day, 10% note payable from its bank. Compute the total cash payment due on the note's maturity date.

Correct AnswerverifiedAt maturity: $60,000...View AnswerShow Answer

Employers:

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Wage brack...
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B

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At maturity: $60,000...
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