Exam 9: Reporting and Analyzing Current Liabilities

Deacon Company provides you with following information related to payroll transactions for the month of May.Prepare journal entries to record the transactions for May. a.Recorded the May payroll using the payroll register information given above. b.Recorded the employer's payroll taxes resulting from the May payroll.The company had a merit rating that reduces its state unemployment tax rate to 3.5% of the first $7,000 paid each employee.Only $42,000 of the current months salaries are subject to unemployment taxes.The federal rate is 0.6%. c.Issued a check to Reliant Bank in payment of the May FICA and employee taxes. d.Issued a check to the state for the payment of the SUTA taxes for the month of May. e.Issued a check to Reliant Bank in payment of the employer's quarterly FUTA taxes for the first quarter in the amount of $1,020.

The times interest earned ratio reflects:

Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $32,500 to be paid during January of the following year.The journal entry on December 31 to record the bonuses is:

A company sells sofas with a 6-month warranty.In January,the company sold 100,000 sofas at $1,750 each; and 500 sofas needed repairs during that same month.The total repairs amounted to $85,000 costs from the upholstery materials inventory.It is estimated that 2% of all units sold will need repairs under warranty at an estimated cost of $200 per unit.Prepare the journal entries to record (a)estimated warranty expense for January and (b)warranty repair costs for January.

On December 1,Victoria Company signed a 90-day,6% note payable,with a face value of $15,000.What amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)

Obligations to be paid within one year or the company's operating cycle,whichever is longer,are:

Identify and discuss the factors involved in computing federal income taxes withheld from employees.

On May 22,Jarrett Company borrows $7,500 from Fairmont Financing,signing a 90-day,8%,$7,500 note.What is the journal entry needed to record the payment of the note by Jarrett Company on the maturity date?

All of the following statements related to current liabilities for U.S.GAAP and IFRS are true except:

Portia Grant is an employee who is paid monthly.For the month of January of the current year,she earned a total of $8,260.The FICA tax for social security is 6.2% of the first $127,200 of employee earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings.The FUTA tax rate of .6% and the SUTA tax rate of 5.4% are applied to the first $7,000 of an employee's pay.The amount of federal income tax withheld from her earnings was $1,325.17.Her net pay for the month is: (Round your intermediate calculations to two decimal places.)

In order to be reported,liabilities must:

Trade accounts payable are amounts owed to suppliers for products or services purchased on credit.

The Federal Insurance Contributions Act (FICA)requires that each employer file a:

Star Recreation receives $48,000 cash in advance ticket sales for 12 home games.Record the advance ticket sales on April 30.Record the revenue earned for the first home game played on August 14.

Times interest earned is computed by dividing income before interest expense and income taxes by ________.

Employees earn vacation pay at the rate of one day per month.During the month of July,25 employees qualify for one vacation day each.Their average daily wage is $100 per day.What is the amount of vacation benefit expense to be recorded for the month of July?

Employers must keep individual earnings reports for each employee.

Employers can use a wage bracket withholding table to compute federal income taxes withheld from each employee's gross pay.

A liability is incurred when income is earned because income tax expense is created by earning income.

Athena Company's salaried employees earn two weeks of vacation per year.It pays $858,000 in total employee salaries for 52 weeks but its employees work only 50.Record Athena Company's weekly journal entry to record the vacation expense: