Exam 8: Current and Contingent Liabilities

A company whose fiscal year ends December 31, has a weekly payroll of $100,000. Employees work 5 days per week, Monday through Friday and payday is every Friday. How much wages expense will be recorded on the Friday, January 3 payday?

When a company estimates the amount of expected warranty expenses to be incurred in the future pertaining to past product sales, the account to be credited is called the ____________________.

Every month, Glacier Distributors orders shipping supplies from a particular vendor. On February 13, 2013, the company orders supplies amounting to $21,000 on account, payable on March 15, 2013. Due to an unexpected decline in business, the company is unable to pay its vendor on March 15th, and so asked for a payment extension. The vendor granted the extension but requires the company to sign a note that specifies 7.5% interest beginning March 15, 2013, with a due date of July 15, 2013. The company pays the amount in full on July 15, 2013. Prepare the necessary journal entries for Glacier Distributors on February 13th, March 15th, and July 15th.

Match the following terms with the appropriate definition. a.Accrued liabilities f.Payroll taxes b.Contingent liabilities g.Sales taxes c.Current liabilities h.Warranty d.Interest rate i.Withholdings e.Liabilities -Probable future sacrifices of economic benefits

During January, Gaston Wholesalers experienced some difficulties with cash flow so it approached one of its vendors about a payment extension. The vendor agreed to the extension on the condition that the company sign a 30-day note that includes 9% interest. What journal entry is needed to record the retirement of the note on the maturity date?

Graphic Designs, Inc. engaged in the following transactions during 2013: Prepare journal entries for each of these transactions.

For each of the types of payroll taxes and other payroll-related items listed, indicate whether it is paid by the employee through a paycheck withholding, by the employer, or both. (Choices may be used more than once.) a.Employee b.Employer c.Both -Gross pay

Match each of the ratios named with the proper formula for computation. a.Current Ratio b.Quick Ratio c.Cash Ratio d.Operating Cash Flow Ratio -Current Assets / Current Liabilities

Giff Services Company experienced some difficulties with cash flow so it approached one of its vendors about a payment extension. The vendor agreed to the extension on the condition that the company sign a note that includes 9% interest. What is the impact on the accounting equation of recording a note payable in exchange for the account payable?

Go Cars has $200 in cash, $500 in accounts receivable, $400 in marketable securities, and $700 in inventory. Assuming the company also has $200 in accounts payable and $200 in unearned sales revenue, what is its cash ratio?

The payment of Accounts Payable results in a(n)

Which of the following would appear on the balance sheet as a current liability?

Which of the following would appear only in the footnotes accompanying the financial statements?

-Refer to the partial balance sheet presented above for Gibraltar, Inc. Compute the total current liabilities for December 31, 2013, and December 31, 2012.

An example of a current liability is a note payable that is due in 8 months.

Match the following terms with the appropriate definition. a.Accrued liabilities f.Payroll taxes b.Contingent liabilities g.Sales taxes c.Current liabilities h.Warranty d.Interest rate i.Withholdings e.Liabilities -Guarantees the repair or replacement of defective goods during a specified period following the sale

Which of the following statements regarding contingent liabilities is true?

____________________ refers to the ability of a company to meet its short-term obligations.

What type of entry is made to create a credit balance in the Estimated Warranty Liability account on the balance sheet? What account would be debited in this entry?

Match each of the ratios named with the proper formula for computation. a.Current Ratio b.Quick Ratio c.Cash Ratio d.Operating Cash Flow Ratio -(Cash + Marketable Securities + Accounts Receivable)/ Current Liabilities