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Exam 10: Liabilities: Current, Installment Notes, and Contingencies

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Question 21

Multiple Choice

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The following totals for the month of April were taken from the payroll register of Magnum Company. Use this information to answer the questions that follow.​ -The journal entry to record the monthly payroll on April 30 would include a

A) credit to Salaries Payable for $8,150
B) debit to Salaries Expense for $7,902
C) debit to Salaries Payable for $8,150
D) debit to Salaries Payable for $7,902

E) A) and D)
F) C) and D)

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Question 22

Multiple Choice

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Which of the following is the most desirable quick ratio?

A) 1.20
B) 1.00
C) 0.95
D) 0.50

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

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Question 23

Multiple Choice

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If a company borrows money from a bank as an installment note, the interest portion of each annual payment will

Assuming no employees are subject to ceilings for their earnings, Harris Company has the following information for the pay period of January 15-31. Use this information to answer the questions that follow. -Assuming that all wages are subject to federal and state unemployment taxes, the employer's payroll tax expense would be

Most employers are levied a tax on payrolls for

Assuming a 360-day year, the interest charged by the bank, at the rate of 6%, on a 90-day, discounted note payable of $100,000 is

Federal unemployment taxes are paid by the employer and the employee.

Based on the following data, what is the quick ratio, rounded to one decimal point?

Assuming a 360-day year, when a $50,000, 90-day, 9% interest-bearing note payable matures, total payment will be

On the first day of the fiscal year, Hawthorne Company obtained an $88,000, 7-year, 5% installment note from Sea Side Bank. The note requires annual payments of $15,208, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $4,400 and principal repayment of $10,808. The journal entry Hawthorne would record to make the first annual payment due on the note would include a

Assuming a 360-day year, when a $20,000, 90-day, 5% interest-bearing note payable matures, total payment will be

The Young Company has the following assets and liabilities: Determine the quick ratio (rounded to one decimal point) .

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

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

On May 18, Rodriguez Co. issued an $84,000, 6%, 120-day note payable on an overdue account payable to Wilson Company. Assume that the fiscal year of Rodriguez ends on June 30. Which of the following relationships is true?

Assuming no employees are subject to ceilings for their earnings, Harris Company has the following information for the pay period of January 15-31. Use this information to answer the questions that follow. -Assume that social security taxes are payable at a 6% rate and Medicare taxes are payable at a 1.5% rate with no maximum earnings, and that federal and state unemployment compensation taxes total 6.2% on the first $7,000 of earnings. If an employee earns $2,500 for the current week and the employee's year-to-date earnings before this week were $6,800, what is the total employer payroll taxes related to the current week?

Salif, Inc. has 15 full-time manufacturing employees. Their weekly payroll averages $17,800, but it varies from week to week primarily due to overtime worked. Last month, the weekly average climbed to $18,700, but no additional overtime had been authorized.​ All employees swipe their badges at the beginning and end of their shift. They are also supposed to swipe their badges when they come and go at lunchtime. The computer automatically calculates the hours worked for each employee. A clerk prints out the time sheets, which are then approved by each employee's supervisor and a manager. The manager rarely finds any problems with the time sheets and frequently signs them without checking them carefully. Once the time sheets are approved, the clerk sends the information to a payroll processor, who completes all the remaining payroll functions. Employees' money is direct-deposited into their accounts, and they receive a pay stub each week.​ When management investigates, they discover that a supervisor had authorized additional overtime for two employees to complete an important project. However, the supervisor had not obtained formal authorization for the overtime. The authorization was given verbally by the plant manager. What internal control procedure would have avoided the extra overtime expense?

The cost of a product warranty should be included as an expense in the

An employee receives an hourly 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, 46; federal income tax withheld, $120; all earnings are subject to social security tax; Social security tax rate, 6%; and Medicare tax rate, 1.5%; state unemployment tax, 5.4% on the first $7,000; federal unemployment tax, 0.8% on the first $7,000. Prepare the journal entries to record the salaries expense and the employer payroll tax expense. If required, round your answers to the nearest cent.

Amounts withheld from each employee for social security and Medicare vary by state.