Exam 10: Current Liabilities and Payroll

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. Description Debit Credit a) b)

The detailed record indicating the data for each employee for each payroll period and the cumulative total earnings for each employee is called the

Use the following key a-d) to identify the proper treatment of each contingent liability. -Event is remote and amount is estimable

Form W-2 is called the Wage and Tax Statement.

The payroll summary for December 31 for Waters Co. revealed total earnings of $80,000. Earnings subject to 6% social security tax were $60,000; earnings subject to 1.5% Medicare tax were $80,000; and earnings of $3,000 were subject to 4.3% state and 0.8% federal unemployment compensation tax. Journalize the entry to record the accrual of payroll taxes.

During the first year of operations, employees earned vacation pay of $35,000. The vacations will be taken during the second year. The vacation pay expense should be recorded in the second year as the vacations are taken by the employees.

Use the following key a-d) to identify the proper treatment of each contingent liability. -Event is remote and amount is not estimable

Salaries Payable would be recorded in the amount of

In a defined benefits plan, the employer bears the investment risks in funding a future retirement income benefit.

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

The journal entry a company uses to record partially funded pension rights for its salaried employees at the end of the year is

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

Journalize the following entries on the books of the borrower and creditor. Label accordingly. Assume a 360-day year is used for interest calculations.)Jun. 1 James Co. purchased merchandise on account from O'Leary Co., $90,000, terms n/30. Jun. 30 James Co. issued a 60-day, 5% note for $90,000 on account. Aug. 29 James Co. paid the amount due.

FICA tax is a payroll tax that is paid only by employers.

The journal entry used to record the issuance of a discounted note for the purpose of borrowing funds for the business is

Use the following key a-d) to identify the proper treatment of each contingent liability. -Event is probably and amount is estimable

Current liabilities are

Ecco Company sold $150,000 of kitchen appliances with six-month warranties during September. The cost to repair defects under the warranty is estimated at 6% of the sales price. On October 15, a customer required a $200 part replacement, plus $85 labor under the warranty. Provide the journal entry for a) the estimated expense on September 30 and b) the October 15 warranty work.

Florida Keys Construction installs swimming pools. It calculates that warranty obligations are 3% of sales. For the year just ending, Florida Keys' sales were $1,450,000. Previous quarterly entries debiting Warranty Expense totaled $28,700. Determine the estimated warranty expense for the year and make the journal entry necessary to bring the account to the needed balance.

Use the following key a-d) to identify the proper treatment of each contingent liability. -Event is reasonably possible and amount is estimable