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Exam 11: Current Liabilities and Payroll

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Question 41

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Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once. -Measures the "instant" debt-paying ability of a company

A) Current ratio
B) Working capital
C) Quick assets
D) Quick ratio
E) Record an accrual and disclose in the notes to the financial statements
F) Disclose only in notes to financial statements
G) No disclosure needed in notes to financial statements

H) C) and F)
I) A) and D)

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Question 42

Multiple Choice

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Which of the following is required to be withheld from an employee's gross pay?

A) both federal and state unemployment compensation taxes
B) only federal unemployment compensation tax
C) only federal income tax
D) only state unemployment compensation tax

E) B) and C)
F) All of the above

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Question 43

Multiple Choice

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Use the following key (a-d) to identify the proper treatment of each contingent liability. -Event is reasonably possible but amount is not estimable

Excom sells radios, and each unit carries a two-year replacement warranty. The cost of repair defects under the warranty is estimated at 5% of the sales price. During September, Excom sells 100 radios for $50 each. One radio is actually replaced during September. For what amount in September would Excom debit Product Warranty Expense?

The following totals for the month of June were taken from the payroll register of Young Company:?? $\begin{array} { l r } \text { Salaries expense } & \$ 15,000 \\\text { Social security and Medicare taxes withheld } & 1,125 \\\text { Income taxes withheld } & 3,000 \\\text { Retirement savings } & 500 \\\text { Salaries subject to federal and state } & \\\quad \text { unemployment taxes of } 6.2 \% & 4,000\end{array}$ The entry to record the accrual of the employer's payroll taxes would include a debit to

The following totals for the month of June were taken from the payroll register of Arcon Company:? $\begin{array} { l r } \text { Sal aries expense } & \$ 14,000 \\\text { Social security and Medicare taxes withheld } & 1,050 \\\text { Income taxes withheld } & 2,600 \\\text { Retirement savings } & 1,000\end{array}$ The entry to record the payment of net pay would include a

Ecco Company sold $150,000 of kitchen appliances with six-month warranties during September. The cost to repair defects under the warranty is estimated at 6% of the sales price. On October 15, a customer required a $200 part replacement, plus $85 labor under the warranty.? Provide the journal entry for (a) the estimated expense on September 30 and (b) the October 15 warranty work.

Wright Company sells merchandise with a one-year warranty. In the current year, sales consisted of 2,000 units. It is estimated that warranty repairs will average $15 per unit sold and 30% of the repairs will be made in the current year and 70% in the next year. In the current year's income statement, Wright should show warranty expense of

An employee receives an hourly wage rate of $15, with time-and-a-half for all hours worked in excess of 40 during the week. Payroll data for the current week are as follows: hours worked, 48; federal income tax withheld, $120; social security tax rate, 6.0%; Medicare tax rate, 1.5%; state unemployment compensation tax, 3.4% on the first $7,000; and federal unemployment compensation tax, 0.8% on the first $7,000. What is the net amount to be paid to the employee?

Assuming a 360-day year, proceeds of $48,750 were received from discounting a $50,000, 90-day note at a bank. The discount rate used by the bank in computing the proceeds was

Florida Keys Construction installs swimming pools. It calculates that warranty obligations are 3% of sales. For the year just ending, Florida Keys' sales were $1,450,000. Previous quarterly entries debiting Warranty Expense totaled $28,700. Determine the estimated warranty expense for the year and make the journal entry necessary to bring the account to the needed balance.

McKay Company sells merchandise with a one-year warranty. In Year 1, sales consisted of 1,200 units. It is estimated that warranty repairs will average $10 per unit sold and 30% of the repairs will be made in Year 1 and 70% in Year 2. In the Year 1 income statement, McKay should show warranty expense of

The journal entry to record the issuance of a note for the purpose of converting an existing account payable would be

Which of the following is the most desirable quick ratio?

Vacation pay payable is reported on the balance sheet as a (n)

An employee receives an hourly rate of $45, with time and a half for all hours worked in excess of 40 during the week. Payroll data for the current week are as follows: hours worked, 48; federal income tax withheld, $950; social security tax rate, 6.0%; Medicare tax rate, 1.5%; state unemployment compensation tax, 3.4% on the first $7,000; federal unemployment compensation tax, 0.8% on the first $7,000.Calculate the employer's payroll tax expense if: (a) This is the first payroll of the year and the employee has no cumulative earnings for the year to date. (b) The employee's cumulative earnings for the year prior to this week equal $6,200. (c) The employee's cumulative earnings for the year prior to this week equal $118,700.

Kelly Howard has the following transactions. Prepare the journal entries.Dec. 31The accrued product warranty expense for the year is estimated to be 2.3% of sales. Sales for the year totaled $6,005,000.31The accrued vacation pay for the year is estimated to be $75,225.31Paid Reliable Insurance Co. $275,000 as fund trustee for the pension plan. The annual pension cost is $350,000.

The amount of federal income taxes withheld from an employee's gross pay is recorded as a (n)

Zennia Company provides its employees with varying amounts of vacation per year, depending on their length of employment. The estimated amount of the current year's vacation cost is $135,000. On December 31, the end of the current year, the current month's accrued vacation pay is

John Woods' weekly gross earnings for the present week were $2,500. Woods has two exemptions. Using an $80 value for each exemption and the tax rate schedule below, what is Woods' federal income tax withholding??