Exam 10: Current Liabilities and Payroll

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%.The second entry in the payroll cycle to record the disbursement of his net pay should include which of the following?

Which of the following is a characteristic of a current liability?

Arc Digital starts the year with balances in its Estimated warranty payable account and Warranty expense account as shown below.During the year,there were $190,000 of sales and $3,200 of warranty repair payments.Arc Digital estimates warranty expense at 1.5% of sales. - At the end of the year,what was the balance in the Estimated warranty payable account?

On June 20,2013,Parker Services received $2,400 in advance from a customer for one month's service.The journal entry to record the receipt of cash would be which of the following?

SUTA (state unemployment compensation)tax is paid by the employer only and is not deducted from gross pay.

Arc Digital starts the year with balances in its Estimated warranty payable account and Warranty expense account as shown below.During the year,there were $190,000 of sales and $3,200 of warranty repair payments.Arc Digital estimates warranty expense at 1.5% of sales. - At the end of the year,what was the balance in the Warranty expense account?

Net pay is the total amount of compensation earned by an employee,before any deductions are made.

The Statewide Sales Company has gross pay for March of $45,000.Please provide the first journal entry in the payroll cycle to record salary expense.

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%.His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA.The fifth journal entry in the payroll cycle to record the payment by the company of payroll taxes to the government includes which of the following?

A $20,000,3-month,8% note payable was issued on November 1,2015.What is the amount of accrued interest on December 31,2015?

On October 1,2012,Archer Sales borrows $100,000 by signing a note payable.The note is for 6 months and bears interest at a rate of 9%.Please provide the journal entry to accrue interest expense at the end of 2012.

A certain contingent liability was evaluated at year-end; the company felt it was probable that it would become an actual liability,and the amount could be reasonably estimated.If the accountant decided NOT to report it on the balance sheet or in the notes to the financial statement,what effect would it have on the financial reporting of the company?

Which of the following is pay stated as a percentage of a sale amount?

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?

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 a credit to Employee benefits payable for $950.

A contingent liability that has a remote possibility of becoming an actual loss is included in a note to the financial statements.

Franconia Sales offers warranties on all their electronic goods.Warranty expense is estimated at 2% of sales revenue.In 2013,Franconia had $500,000 of sales.In the same year,Franconia paid out $7,500 of warranty payments. -Which of the following is the entry needed to record the estimated warranty expense?

Dan Jones and Pat Smith are the only two employees of Lone Star Company.In January,2012,Dan's gross pay was $4,400 and Pat's gross pay was $5,200.All earnings are subject to FICA taxes of 8%. Which of the following would be included in the entry to record the payroll tax expense to be paid out by Lone Star Company for January?

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%.His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA.The fifth journal entry in the payroll cycle to record the payment by the company of payroll taxes to the government includes a debit to FICA payable of $306.

The Statewide Sales Company has gross pay for March of $45,000.Which of the following would be included in the first journal entry in the payroll cycle to record salary expense?