Exam 8: Current and Contingent Liabilities

General Lighting During the first quarter of 2013, the company sold 4,000 batteries on credit for $150 each plus state sales tax of 6%. -Refer to General Lighting. The price of each battery includes a $1.95 federal excise tax. Any taxes collected must be paid to the appropriate governmental units at the end of the quarter. Which of the following is the proper journal entry to record for the sale of the batteries?

Match each of the following current liabilities with its meaning. a. Account payable b. Note payable c. Wages payable d. Interest payable e. Sales taxes payable f. FICA taxes payable g. Unemployment taxes payable h. Unearned sales revenues i. Estimated warranty liability -Amounts collected from customers in advance.

Golden Sound sells premium car stereo systems and various equipment for home sound systems as well. Sales and expected warranty claims for 2012 are as follows: Prepare the journal entry to record warranty expense for 2012.

What is the impact on the accounting equation of recording the accrual of wages expense?

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

On May 1, a company borrowed $30,000 from the First National Bank on a 1-year, 6% note. Assuming the company keeps its records on a calendar year basis, an entry is needed on December 31st to increase

An obligation that involves an existing condition for which the outcome is not known with certainty and depends upon some event that will occur in the future is called a(n)____________________.

What is the purpose of the current ratio? How does it differ from the quick ratio?

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 -Medicare taxes

Assume that a company has a cash ratio of .45. Recording the estimated warranties expense on the period's sales would cause the cash ratio to

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 Flows from Operating Activities / Current Liabilities

The operating cash flow ratio is calculated by dividing current assets by cash flows from operating activities.

Warranty expenses result when a company sells products then estimates the units and cost per unit for repairs and replacements that may occur during the warranty period.

When a company sells goods or provides services for a customer but the customer intends to pay later, the company must record a current liability.

What is meant by the term "current maturities of long-term debt" in the current liabilities section of a balance sheet?

Georgia's Salon The salon sells $50,000 of gift cards in May 2013. These gift cards may be used anytime before their expiration on May 31, 2014. -Refer to Georgia's Salon. On May 31, 2013, all but $1,500 of the gift cards had been redeemed for salon services. What is the impact on the accounting equation of recording the expired gift cards?

Match each of the following current liabilities with its meaning. a. Account payable b. Note payable c. Wages payable d. Interest payable e. Sales taxes payable f. FICA taxes payable g. Unemployment taxes payable h. Unearned sales revenues i. Estimated warranty liability -Amounts funded by companies to provide benefits to fired workers.

Acceptable current ratios vary from industry to industry, but a general rule of thumb is that a current ratio greater than ____________________ is appropriate.

A manufacturing company's weekly payroll is $80,000 for a 5-day work week beginning each Monday and ending each Friday. The last time salaries and wages were recorded was Friday, December 26. What adjustment is needed on December 31, the last day of the company's fiscal period?

A probable loss from a lawsuit that can be reasonably estimated should not be reported on the balance sheet as a current liability.