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Exam 11: Current Liabilities and Payroll

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Question 51

True/False

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Payroll taxes levied against employers become an employer liability at the time the employee wages are incurred.

A) True
B) False

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Question 52

Multiple Choice

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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. -Cash + Temporary investments + Accounts receivable

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) B) and D)
I) A) and F)

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Question 53

Multiple Choice

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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. -Reasonably possible likelihood of a liability

The payroll register of Seaside Architecture Company indicates $970 of social security and $257 of Medicare tax withheld on total salaries of $16,500 for the period. Federal withholding for the period totaled $4,235. Prepare the journal entry for the period's payroll.

Journalize the following transactions:Dec. 31The accrued product warranty expense for the year is estimated to be 1.5% of sales. Sales for the year totaled $7,760,000.31The accrued vacation pay for the year is estimated to be $46,000.31Paid Reliable Insurance Co. $85,000 as fund trustee for the pension plan. The annual pension cost is $109,000.

Generally, all deductions made from an employee's gross pay are required by law.

According to a summary of the payroll of Scotland Company, $450,000 was subject to the 6.0% social security tax and $500,000 was subject to the 1.5% Medicare tax. Federal income tax withheld was $98,000. Also, $15,000 was subject to state (4.2%) and federal (0) 8%) unemployment taxes. The journal entry to record accrued salaries would include a

According to a summary of the payroll of Scotland Company, $500,000 was subject to the 6.0% social security tax and to the 1.5% Medicare tax. Federal income tax withheld was $98,000. Also, $15,000 was subject to state (4.2%) and federal (0) 8%) unemployment taxes. The journal entry to record the accrued salaries would include a​

The journal entry a company uses to record the estimated product warranty liability expense is

Blast sells portable CD players, and each unit carries a one-year replacement warranty. The cost of repair defects under the warranty is estimated at 10% of the sales price. During May, Blast sells 650 portable CD players for $50 each. For what amount in May would Blast debit Product Warranty Expense?

A pension plan that promises employees a fixed annual pension benefit, based on years of service and compensation, is called a (n)

Crafter Company has the following assets and liabilities:?? $\begin{array}{|l|r|}\hline {\text { Assets }} & \\\hline \text { Cash } & \$ 28,000 \\\hline \text { Accounts receivable } & 15,000 \\\hline\text { Inventory } & 20,000 \\\hline \text { Equipment }& 50,000 \\\hline & \\\hline{\text { Liabilities }}\\\hline \text { Current portion of long-term debt } & \$ 10,000 \\\hline \text { Accounts payable } & 2,000 \\\hline \text { Long-term debt } & 25,000 \\\hline\end{array}$ Determine the quick ratio (rounded to one decimal point) .

Based on the following data, what is the quick ratio (rounded to one decimal point) ??? $\begin{array} { l r } \text { Accounts payable } & \$ 30,000 \\\text { Accounts receivable } & 60,000 \\\text { Accrued liabilities } & 5,000 \\\text { Cash } & 30,000 \\\text { Intangible assets } & 50,000 \\\text { Inventory } & 69,000 \\\text { Long-term investments } & 80,000 \\\text { Long-term liabilities } & 100,000 \\\text { Marketable securities } & 30,000 \\\text { Fixed assets } & 670,000 \\\text { Prepaid expenses } & 1,000\end{array}$

Nelson Industries warrants its products for one year. The estimated product warranty is 4.3% of sales. Sales were $475,000 for September. In October, a customer received warranty repairs requiring $215 of parts and $65 of labor.​ (a)Journalize the adjusting entry required at September 30, the end of the first month of the current year, to record the estimated product warranty expense. (b)Journalize the entry to record the warranty work provided in October.​​

Employers are required to compute and report payroll taxes on a calendar-year basis, even if a different fiscal year is used for financial reporting and income tax purposes.

Journalize the following entries on the books of the borrower and creditor. Label accordingly. (Assume a 360-day year is used for interest calculations.)June 1Regis Co. purchased merchandise on account from Winthrop Co., $60,000, terms n/30. The cost of merchandise sold was $36,000.30Regis Co. issued a 60-day, 5% note for $60,000 on account.Aug. 29Regis Co. paid the amount due.?

In order to be a recorded contingent liability, the liability must be possible and easily estimated.

Each year, there is a ceiling for the amount that is subject to all of the following except

Current liabilities are due

Most employers are levied a tax on payrolls for