Question 1

Describe contingent liabilities and how to account for and/or report them.

Accepted Answer

Contingent liabilities are uncertain obl

Question 2

A company sold $12,000 worth of bicycles with an extended warranty.The company's experience is that warranty expense averages 2% of sales.The current period's entry to record the warranty expense is:

Accepted Answer

A) Debit Warranty Expense $240; credit Cash $240. 
B) Debit Prepaid Warranties $240; credit Warranty Expense $240. 
C) Debit Estimated Warranty Liability $240; credit Cash $240. 
D) Debit Sales Allowances $240; credit Estimated Warranty Liability $240. 
E) Debit Warranty Expense $240; credit Estimated Warranty Liability $240. 
A) Debit Warranty Expense $240; credit Cash $240. 
B) Debit Prepaid Warranties $240; credit Warranty Expense $240. 
C) Debit Estimated Warranty Liability $240; credit Cash $240. 
D) Debit Sales Allowances $240; credit Estimated Warranty Liability $240. 
E) Debit Warranty Expense $240; credit Estimated Warranty Liability $240.

Question 3

If the times interest earned ratio:

Accepted Answer

A) Increases,then risk increases. 
B) Increases,then risk decreases. 
C) Is greater than 1.5,the company is in default. 
D) Is less than 1.5,the company is carrying too little debt. 
E) Is greater than 3.0,the company is likely carrying too much debt. 
A) Increases,then risk increases. 
B) Increases,then risk decreases. 
C) Is greater than 1.5,the company is in default. 
D) Is less than 1.5,the company is carrying too little debt. 
E) Is greater than 3.0,the company is likely carrying too much debt.

Question 4

A corporation has a $40,000 credit balance in the Income Tax Payable account.Period end information shows that the actual liability is $47,000.The company should record an entry to debit Income Tax Expense for $7,000 and credit Income Taxes Payable for $7,000.

Accepted Answer

A) True 
 B)False

Question 5

The payroll records of a company provided the following data for the weekly pay period ended December 7:
   The FICA social security tax rate is 6.2% and the FICA Medicare tax rate is 1.45% on all of this week's wages paid to each employee.The federal and state unemployment tax rates are 0.8% and 5.4%,respectively,on the first $7,000 paid to each employee.Prepare the journal entries to (a)accrue the payroll and (b)record payroll taxes expense.

Accepted Answer

The answer of The payroll records of a company provided...

Question 6

A company's income before interest expense and taxes is $250,000 and its interest expense is $100,000.Its times interest earned ratio is 2.5.

Accepted Answer

A) True 
 B)False

Question 7

An employee earns $5,500 per month working for an employer.The FICA tax rate for Social Security is 6.2% of the first $127,200 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings.The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both unemployment taxes are applied to the first $7,000 of an employee's pay.The employee has $182 in federal income taxes withheld.The employee has voluntary deductions for health insurance of $150 and contributes $75 to a retirement plan each month.What is the amount of net pay for the employee for the month of January? (Round your intermediate calculations to two decimal places.)

Accepted Answer

A) $4,827.00 
B) $4,672.25 
C) $4,628.25 
D) $4,386.25 
E) $4,430.25 
A) $4,827.00 
B) $4,672.25 
C) $4,628.25 
D) $4,386.25 
E) $4,430.25

Question 8

All of the following statements regarding uncertainty in liabilities are true except:

Accepted Answer

A) Liabilities can involve uncertainty in whom to pay. 
B) A company can create a liability with a known amount even when the holder of the note may not be known until the maturity date. 
C) A company can have an obligation of a known amount to a known creditor but not know when it must be paid. 
D) A company only records liabilities when it knows whom to pay,when to pay,and how much to pay. 
E) A company can be aware of an obligation but not know how much will be required to settle it. 
A) Liabilities can involve uncertainty in whom to pay. 
B) A company can create a liability with a known amount even when the holder of the note may not be known until the maturity date. 
C) A company can have an obligation of a known amount to a known creditor but not know when it must be paid. 
D) A company only records liabilities when it knows whom to pay,when to pay,and how much to pay. 
E) A company can be aware of an obligation but not know how much will be required to settle it.

Question 9

The amount of federal income taxes withheld from an employee's paycheck is determined by:

Accepted Answer

A) Current earnings for the pay period and number of withholding allowances the employee claims. 
B) The employer's merit rating. 
C) The amount of social security taxes withheld. 
D) Multiplying the gross pay by 6.2%. 
E) Tax tables provided by the state in which the employee works. 
A) Current earnings for the pay period and number of withholding allowances the employee claims. 
B) The employer's merit rating. 
C) The amount of social security taxes withheld. 
D) Multiplying the gross pay by 6.2%. 
E) Tax tables provided by the state in which the employee works.

Question 10

In the accounting records of a defendant,lawsuits:

Accepted Answer

A) Are estimated liabilities. 
B) Should always be recorded. 
C) Should always be disclosed. 
D) Should be recorded if payment for damages is probable and the amount can be reasonably estimated. 
E) Should never be recorded. 
A) Are estimated liabilities. 
B) Should always be recorded. 
C) Should always be disclosed. 
D) Should be recorded if payment for damages is probable and the amount can be reasonably estimated. 
E) Should never be recorded.

Question 11

On November 1,Alan Company signed a 120-day,8% note payable,with a face value of $9,000.Alan made the appropriate year-end accrual.What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made? (Use 360 days a year.)

Accepted Answer

A) Debit Notes Payable $9,000; debit Interest Payable $120; credit Cash $9,120. 
B) Debit Cash $9,240; credit Notes Payable $9,240. 
C) Debit Notes Payable $9,240; credit Interest Payable $120; credit Interest Expense $120; credit Cash $9,000. 
D) Debit Notes Payable $9,000; debit Interest Payable $120; debit Interest Expense $120; credit Cash $9,240. 
E) Debit Notes Payable $9,000; debit Interest Expense $240; credit Cash $9,240. 
A) Debit Notes Payable $9,000; debit Interest Payable $120; credit Cash $9,120. 
B) Debit Cash $9,240; credit Notes Payable $9,240. 
C) Debit Notes Payable $9,240; credit Interest Payable $120; credit Interest Expense $120; credit Cash $9,000. 
D) Debit Notes Payable $9,000; debit Interest Payable $120; debit Interest Expense $120; credit Cash $9,240. 
E) Debit Notes Payable $9,000; debit Interest Expense $240; credit Cash $9,240.

Question 12

Debt guarantees are usually disclosed as a contingent liability.

Accepted Answer

A) True 
 B)False

Question 13

A note payable can be used to extend the payment due on an account payable.

Accepted Answer

A) True 
 B)False

Question 14

An employee earned $4,600 in February working for an employer.Cumulative earnings of the previous pay periods are $4,800.The FICA tax rate for Social Security is 6.2% of the first $127,200 of earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings.The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both unemployment taxes are applied to the first $7,000 of an employee's pay.What is the amount the employer should record as payroll taxes expense for the month of February?

Accepted Answer

A) $581.90 
B) $110.00 
C) $351.90 
D) $483.90 
E) $230.00 
A) $581.90 
B) $110.00 
C) $351.90 
D) $483.90 
E) $230.00

Question 15

A company's has fixed interest expense of $52,000,income taxes expense of $121,000,and net income of $281,000.The company's times interest earned ratio equals:

Accepted Answer

A) 8.73. 
B) 5.40. 
C) 7.73. 
D) 2.33. 
E) 0.11. 
A) 8.73. 
B) 5.40. 
C) 7.73. 
D) 2.33. 
E) 0.11.

Question 16

The chief executive officer earns $20,000 per month.As of June 30,her gross pay was $120,000.The tax rate for Social Security is 6.2% of the first $127,200 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings.The current FUTA tax rate is 0.6%,and the SUTA tax rate is 4.4%.Both unemployment taxes are applied to the first $7,000 of an employee's pay.What is the amount of FICA- Social Security withheld from this employee for the month of July?

Accepted Answer

A) $7,347.00 
B) $1,147.00 
C) $1,240.00 
D) $446.40 
E) $290.00 
A) $7,347.00 
B) $1,147.00 
C) $1,240.00 
D) $446.40 
E) $290.00

Question 17

A company has 90 employees and a weekly payroll of $117,000.The FICA-social security tax withheld totals $7,254 and the FICA-Medicare tax withheld totals $1,696.50.The total withholding for federal income tax is $16,500.Prepare the journal entry to accrue this week's salaries expense and withholdings.

Accepted Answer

The answer of A company has 90 employees and a...

Question 18

On December 1,Victoria Company signed a 90-day,6% note payable,with a face value of $15,000.Assuming the company does not prepare reversing entries,what is the journal entry to record the repayment of the note on March 1?

Accepted Answer

A) Debit Notes Payable,$15,225; Credit Cash,$15,225. 
B) Debit Notes Payable,$15,000; Credit Cash,$15,000. 
C) Debit Notes Payable,$15,000; Debit Interest Expense,$225; Credit Cash,$15,225. 
D) Debit Notes Payable,$15,000; Debit Interest Expense,$150; Debit Interest Payable,$75; Credit Cash,$15,225. 
E) Debit Notes Payable,$15,075; Debit Interest Expense,$150; Credit Cash,$15,225. 
A) Debit Notes Payable,$15,225; Credit Cash,$15,225. 
B) Debit Notes Payable,$15,000; Credit Cash,$15,000. 
C) Debit Notes Payable,$15,000; Debit Interest Expense,$225; Credit Cash,$15,225. 
D) Debit Notes Payable,$15,000; Debit Interest Expense,$150; Debit Interest Payable,$75; Credit Cash,$15,225. 
E) Debit Notes Payable,$15,075; Debit Interest Expense,$150; Credit Cash,$15,225.

Question 19

Richardson Fields receives $31,680 cash in advance ticket sales for 11 home soccer games.Record the advance ticket sales on March 31.Record the revenue earned for the first game played on August 17.

Accepted Answer

The answer of Richardson Fields receives $31,680 cash in advance...

Question 20

The times interest earned ratio is calculated by dividing interest expense by income before interest expense and income taxes.

Accepted Answer

A) True 
 B)False

Describe contingent liabilities and how to account for and/or report them.

A company sold $12,000 worth of bicycles with an extended warranty.The company's experience is that warranty expense averages 2% of sales.The current period's entry to record the warranty expense is:

If the times interest earned ratio:

A corporation has a $40,000 credit balance in the Income Tax Payable account.Period end information shows that the actual liability is $47,000.The company should record an entry to debit Income Tax Expense for $7,000 and credit Income Taxes Payable for $7,000.

A company's income before interest expense and taxes is $250,000 and its interest expense is $100,000.Its times interest earned ratio is 2.5.

All of the following statements regarding uncertainty in liabilities are true except:

The amount of federal income taxes withheld from an employee's paycheck is determined by:

In the accounting records of a defendant,lawsuits:

On November 1,Alan Company signed a 120-day,8% note payable,with a face value of $9,000.Alan made the appropriate year-end accrual.What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made? (Use 360 days a year.)

Debt guarantees are usually disclosed as a contingent liability.

A note payable can be used to extend the payment due on an account payable.

A company's has fixed interest expense of $52,000,income taxes expense of $121,000,and net income of $281,000.The company's times interest earned ratio equals:

On December 1,Victoria Company signed a 90-day,6% note payable,with a face value of $15,000.Assuming the company does not prepare reversing entries,what is the journal entry to record the repayment of the note on March 1?

Richardson Fields receives $31,680 cash in advance ticket sales for 11 home soccer games.Record the advance ticket sales on March 31.Record the revenue earned for the first game played on August 17.

The times interest earned ratio is calculated by dividing interest expense by income before interest expense and income taxes.

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters

Exam 9: Reporting and Analyzing Current Liabilities

Describe contingent liabilities and how to account for and/or report them.

A company sold $12,000 worth of bicycles with an extended warranty.The company's experience is that warranty expense averages 2% of sales.The current period's entry to record the warranty expense is:

If the times interest earned ratio:

A corporation has a $40,000 credit balance in the Income Tax Payable account.Period end information shows that the actual liability is $47,000.The company should record an entry to debit Income Tax Expense for $7,000 and credit Income Taxes Payable for $7,000.

A company's income before interest expense and taxes is $250,000 and its interest expense is $100,000.Its times interest earned ratio is 2.5.

All of the following statements regarding uncertainty in liabilities are true except:

The amount of federal income taxes withheld from an employee's paycheck is determined by:

In the accounting records of a defendant,lawsuits:

On November 1,Alan Company signed a 120-day,8% note payable,with a face value of $9,000.Alan made the appropriate year-end accrual.What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made? (Use 360 days a year.)

Debt guarantees are usually disclosed as a contingent liability.

A note payable can be used to extend the payment due on an account payable.

A company's has fixed interest expense of $52,000,income taxes expense of $121,000,and net income of $281,000.The company's times interest earned ratio equals:

On December 1,Victoria Company signed a 90-day,6% note payable,with a face value of $15,000.Assuming the company does not prepare reversing entries,what is the journal entry to record the repayment of the note on March 1?

Richardson Fields receives $31,680 cash in advance ticket sales for 11 home soccer games.Record the advance ticket sales on March 31.Record the revenue earned for the first game played on August 17.

The times interest earned ratio is calculated by dividing interest expense by income before interest expense and income taxes.

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters