Exam 10: Current Liabilities and Payroll

Tom's gross pay for the week is $800.Tom's yearly pay is under the limit for OASDI.Assume that the rate for state and federal unemployment compensation taxes is 6.2%,and that Tom's pay year-to-date has not yet exceeded the $7,000 cap.How much is the total amount of payroll taxes that Tom's employer must record as payroll tax expenses?

The person who promises to pay a certain amount of money at a specified date in the future is called the:

Which of the following is pay over and above base salary,usually paid for exceptional performance?

A restaurant has been sued because a customer claims to have found a bug in her chili.The company's lawyers believe there is only a remote possibility that the lawsuit will result in an actual liability.Which of the following actions should be taken by the company's management?

FUTA (federal unemployment compensation)tax is paid by the employee and deducted from gross pay.

Charter Services sells a service plan for commercial computer maintenance.The price is $1,200 per year,paid in advance.On December 1,2013,Charter sells a service plan to a new customer for cash.Please provide the journal entry to record this transaction.

Tom's gross pay for the week is $800.Tom's deduction for federal income tax is based on a rate of 18%.Tom has no voluntary deductions.Tom's yearly pay is under the limit for OASDI.What is the amount of FICA withheld from Tom's pay?

Sue works 46 hours at her job during the week.She is paid $13.30/hour and receives overtime at the rate of time-and-one-half for hours worked over forty.What is Sue's gross pay for the week?

Associated Foods had cash sales of $787,000 during the month of August.Sales taxes of 7% were collected on the sales.Prepare an aggregate journal entry to record the sales revenue and sales tax for the month.

Franconia Sales offers warranties on all their electronic goods.Warranty expense is estimated at 2% of sales revenue.In 2014,Franconia had $500,000 of sales.In the same year,Franconia paid out $7,500 of warranty payments.Please provide the journal entry to record the warranty expense.

Which of the following is a reason that many companies maintain two payroll bank accounts?

Art Parrish,the sole employee of Parrish Sales,has gross salary for March of $4,000.The entire amount is under the OASDI limit of $106,800,and thus subject to FICA.He is also subject to federal income tax at a rate of 18%.Art has a deduction of $320 for health insurance and $80 for United Way.The second entry in the payroll cycle to record the disbursement of his net pay should include which of the following?

Art Parrish is the sole employee of Parrish Sales.His company pays a portion of his health insurance premium,and also contributes to a retirement plan in his name.The company share of the health insurance premium is $400,and the company contribution to the retirement plan is $550.Please provide the third journal entry in the payroll cycle to record the employee benefits paid by the company.

Tom's gross pay for the week is $800.Tom's deduction for federal income tax is based on a rate of 18%.Tom has no voluntary deductions.Tom's yearly pay is under the limit for OASDI.How much is the amount of FICA tax that Tom's employer must record as payroll tax expense and pay to Social Security?

ABC signed a 5-year,9% note payable for $80,000 on May 1,2012.Which account will be credited when the note paid at maturity?

Sales revenue for a sporting goods store amounted to $215,000 for the current period.All sales are on account and are subject to a sales tax of 7%.Which of the following would be included in the journal entry to record these sales?

Which of the following is NOT an exact liability?

Art Parrish is the sole employee of Parrish Sales.His company pays a portion of his health insurance premium,and also contributes to a retirement plan in his name.The company share of the health insurance premium is $400,and the company contribution to the retirement plan is $550.The third journal entry in the payroll cycle to record the employee benefits to be paid by the company should include which of the following?

FICA tax is paid by both the employer and the employee.

Booker Company reported sales revenue for 2013 of $800,000.The products were sold with a six-month warranty.Members of Booker's management estimate the cost of the warranty will be equal to 3% of sales revenue.Which of the following is included in the entry to record the actual amounts paid out as a result of warranty claims?