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Exam 10: Current Liabilities and Payroll

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Question 71

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The employee's earnings record would contain which data that the payroll register would probably not contain?

A) deductions
B) payment
C) earnings
D) cumulative earnings

E) A) and D)
F) B) and D)

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Question 72

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The following information is for employee Ella Dodd for the week ended March 15. Total hours worked: 48 Rate: $15 per hour,with double time for all hours in excess of 40 Federal income tax withheld: $200 United Fund deduction: $50 Cumulative earnings prior to current week: $6,400 Tax rates: Social security: 6% on maximum earnings of $120,000.Medicare tax: 1.5% on all earnings. State unemployment: 3.4% on maximum earnings of $7,000; on employer Federal unemployment: 0.8% on maximum earnings of $7,000; on employer a- Determine 1 total earnings,2 total deductions,and 3 cash paid. b- Determine each of the employer's payroll taxes related to the earnings of Ella Dodd for the week ended March 15.

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Question 73

Multiple Choice

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Which of the following taxes are employers required to withhold from employees?

During September,Excom sold 100 radios for $50 each and provided a two-year warranty with each unit.Each radio cost Excom $30 to produce.If 5% of the goods sold typically need to be replaced over the warranty period and one is actually replaced during September,for what amount in September would Excom debit Product Warranty Expense?

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

The journal entry used to record the payment of a discounted note is

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

Interest expense is reported in the operating expense section of the income statement.

Journalize the following entries on the books of Winston Co.for August 1,September 1,and November 30.Assume a 360-day year is used for interest calculations. Aug.1 Winston Co.purchased merchandise for $75,000 on account from Bagley Co.,terms n/30.Sept.1 Winston Co.issued a 90-day,6% note for $75,000 on account. Nov.30 Winston Co.paid the amount due.

Below are two independent sets of transactions for Welcott Company: a Welcott provides its employees with varying amounts of vacation per year,depending on the length of employment.The estimated amount of the current year's vacation pay is $78,000.Journalize the adjusting entry required on January 31,the end of the first month of the year,to record the accrued vacation pay. b Welcott maintains a defined contribution pension plan for its employees.The plan requires quarterly installments to be paid to the funding agent,Northern Trust,by the fifteenth of the month following the end of each quarter.Assuming that the pension cost is $119,600 for the quarter ended December 31,journalize entries to record 1 the accrued pension liability on December 31 and 2 the payment to the funding agent on January 15.

Current liabilities are

During May,Blast sold 650 portable CD players for $50 each and provided a one-year warranty with each unit.Each CD player cost Blast $25 to produce.If 10% of the goods sold typically need to be replaced over the warranty period,for what amount should Blast debit Product Warranty Expense in May?

Federal unemployment compensation tax becomes an employer's liability at the time the employee is paid.

Payroll taxes levied against employees become liabilities

The following totals for the month of February were taken from the payroll register of Arcon Company: $\begin{array}{lr} \text {Salaries expense} &\$ 13,000 \\ \text {Social security and Medicare taxes withheld} &975\\ \text {Income taxes withheld} &2,600\\ \text {Retirement savings} &500\\ \text {Salaries subject to federal and state unemplovment taxes of 6,2 \% } &4,000 \\\end{array}$ a- How much is the total payroll expense for Arcon Company for this payroll? b- Assume that the monthly salaries expense remains the same for the entire year and no employees are hired or fired during that time.Based on what you learned in Chapter 11 about payroll taxes,do you expect the total payroll expense to stay the same every month? Explain.

Martin Jackson receives an hourly wage rate of $30,with time and a half for all hours worked in excess of 40 hours during a week.Payroll data for the current week are as follows: hours worked,46; federal income tax withheld,$350; social security tax rate,6.0%; and Medicare tax rate,1.5%.What is the net amount to be paid to Jackson?

The total earnings of an employee for a payroll period is referred to as

An employee earns $40 per hour and 1.5 times that rate for all hours in excess of 40 hours per week.Assume that the employee worked 60 hours during the week,and that the gross pay prior to the current week totaled $58,000.Assume further that the social security tax rate was 6.0%,the Medicare tax rate was 1.5%,and the federal income tax to be withheld was $614. a Determine the gross pay for the week. b Determine the net pay for the week.

The accounting for defined benefit plans is usually very easy and straightforward.

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