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Exam 10: Current Liabilities and Payroll

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Question 61

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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

A) $36,750
B) $15,750
C) $52,500
D) $0

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

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Question 62

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Quick assets include

A) cash; cash equivalents, receivables, prepaid expenses, and inventory
B) cash; cash equivalents, receivables, and prepaid expenses
C) cash; cash equivalents, receivables, and inventory
D) cash; cash equivalents, and receivables

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

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Question 63

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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, 48; federal income tax withheld, $120; cumulative earnings for the year prior to this week, $24,500; Social security tax rate, 6% on maximum of $100,000; and Medicare tax rate, 1.5% on all earnings; state unemployment compensation tax, 3.4% on the first $7,000; federal unemployment compensation tax, .8% on the first $7,000. What is the net amount to be paid the employee?

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, 6.5% on maximum of $100,000; and Medicare tax rate, 1.5% on all earnings; state unemployment compensation tax, 3.4% on the first $7,000; federal unemployment compensation tax, .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 $98,700.

The total net pay for a period is determined from the payroll register.

The current assets and current liabilities for Kolbie Company and Newton Company are shown as follows at the end of 2012. *These represent prepaid expenses and other non-quick current assets. Required: (1) Determine the quick ratio for both companies. Round to two decimal places. (2) Interpret the quick ratio difference between the two companies.

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

An employee receives an hourly rate of $30, 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, $300; cumulative earnings for year prior to current week, $90,700; social security tax rate, 6.0% on maximum of $100,000; and Medicare tax rate, 1.5% on all earnings. What is the net amount to be paid the employee?

An employee's take home pay is equal to gross pay less all voluntary deductions.

The proceeds from discounting a $20,000, 60-day, note payable at 6% is $20,200.

FICA tax becomes a liability to the federal government at the time an employee's payroll is prepared.

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

The amount of money a borrower receives from the lender is called discount rate.

Medicare taxes are withheld from an employee's pay only until the employee has earned a specific amount each year.

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

A current liability is a debt that can reasonably expected to be paid

For which of the following taxes is there no ceiling on the amount of employee annual earnings subject to the tax?

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

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

On August 1, Batson Company issued a 60-day note with a face amount of $120,000 to Jergens Company for merchandise inventory. (Assume a 360-day year is used for interest calculations.)