Exam 9: Reporting and Analyzing Current Liabilities

An employee earned $62,500 during the year working for an employer.The FICA tax rate for Social Security is 6.2% of the first $127,200 of employee earnings per 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 of total unemployment taxes the employer must pay?

Which of the following is not true regarding the unemployment insurance program?

________ are probable future payments of assets or services that a company is presently obligated to make as a result of past transactions or events.

Deposits of amounts payable to the federal government may be paid through federal depository banks.

An employee earns $9,450 for the current period.The cumulative earnings of previous pay periods is $118,700.Social security tax applies to the first $127,200 of employee earnings.Calculate the total and individual amounts to be withheld for social security (6.2%),Medicare (1.45%)and federal income tax (15%).

The Wage and Tax Statement given to each employee annually is:

A company borrowed $60,000 by signing a 60-day,5% note payable from its bank.Compute the total cash payment due on the note's maturity date.

A short-term note payable is a written promise to pay a specified amount on a definite future date within one year or the operating cycle,whichever is shorter.

Cantrell Company is required by law to collect and remit sales taxes to the state.If Cantrell has $8,000 of cash sales that are subject to an 8% sales tax,what is the journal entry to record the cash sales?

A high merit rating for state unemployment taxes means that an employer has high employee turnover or seasonal hiring.

A contingent liability is a potential obligation that depends on a future event arising from a past transaction or event.

On June 1,Jasper Company signed a $25,000,120-day,6% note payable to cover a past due account payable. a.What is the total amount of interest to be paid on this note? b.Prepare Jasper Company's general journal entry to record the issuance of the note payable. c.Prepare Jasper Company's general journal entry to record the payment of the note on September 29.

A high value for the times interest earned ratio means that a company is a lower risk borrower.

SaveMart had income before interest expense and income taxes of $12,581 million and interest expense of $1,063 million.Valueland had income before interest expense and income taxes of $3,596 million and interest expense of $1,143 million.Calculate the times interest earned for each company and comment on the results.

The total compensation an employee earns including wages,salaries,commissions,bonuses,and any compensation earned before deductions such as taxes is called ________.

A payroll register does not include:

________ are amounts owed to suppliers for products or services purchased on credit.

If a company has advance ticket sales totaling $2,000,000 for the upcoming football season,the receipt of cash would be journalized as:

The amount of FICA tax that employers must pay is twice the amount of the FICA taxes withheld from their employees.

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 company should: