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Exam 10: Current Liabilities and Payroll

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Question 71

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A business issued a 120-day,6% note for $10,000 to a creditor on account.The company uses a 360-day year for interest calculations.Journalize the entries to record (a)the issuance of the note and (b)the payment of the note at maturity,including interest.

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*$10,000 ...

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Question 72

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Notes may be issued

A) when assets are purchased
B) to creditor's to temporarily satisfy an account payable created earlier
C) when borrowing money
D) all of the above

E) A) and B)
F) B) and C)

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Question 73

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The Crafter Company had the following assets and liabilities as of December 31,2012: Determine the quick ratio for the end of the year (rounded to one decimal point) .

The following totals for the month of June were taken from the payroll register of Young Company: The entry to record the accrual of employer's payroll taxes would include a

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.Provide the journal entry for the period's payroll.

An employee receives an hourly rate of $40,with time and a half for all hours worked in excess of 40 during a week.Payroll data for the current week are as follows: hours worked,46;federal income tax withheld,$350;cumulative earnings for year prior to current week,$99,700;social security tax rate,6.0% on maximum of $100,000;and Medicare tax rate,1.5% on all earnings.What is the gross pay for the employee?

Aqua Construction installs swimming pools. They calculate that warranty obligations are 5% of gross sales. For the year just ending Aqua's gross sales were $1,500,000. Due to previous quarter recognitions,the Warranty Liability account has a credit balance of $48,700. Determine the year's total warranty liability and journalize any necessary value to establish the year's liability at December 31st.

On June 8,Alton Co.issued an $95,000,6%,120-day note payable to Seller Co.What is the due date of the note?

According to a summary of the payroll of Scotland Company,$450,000 was subject to the 7.0% 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 payroll taxes would include:

Obligations that depend on past events and that are based on future possible events are contingent liabilities.

Garrett Company sells merchandise with a one year warranty.In 2012,sales consisted of 3,500 units.It is estimated that warranty repairs will average $15 per unit sold,and 30% of the repairs will be made in 2012 and 70% in 2013.In the 2012 income statement,Garrett should show warranty expense of

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.

For proper matching of revenues and expenses,the estimated cost of fringe benefits must be recognized as an expense of the period during which the employee earns the benefits.

The proceeds of a discounted note are equal to the face value of the note.

A defined contribution plan promises employees a fixed annual pension benefit.

A business borrowed $40,000 on March 1 of the current year by signing a 60-day,9% interest bearing note.Assuming a 360-day year,when the note is paid on April 30,the entry to record the payment should include a

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

Which of the following is an example of a variable component of a payroll system?

A pension plan which requires the employer to make annual pension contributions,with no promise to employees regarding future pension payments,is termed

An aid in internal control over payrolls that indicates employee attendance is