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 amount of state and federal unemployment tax that Tom's employer must record as payroll tax expense and pay to the federal and state governments?

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 7.65%. Which of the following would be included in the entry to record the salary expense for January?

Which of the following is paid by both the employee and the employer?

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.His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA.The fourth journal entry in the payroll cycle to record the employer's payroll taxes should include which of the following?

FICA tax is a tax which is paid both by the employer and the employee in equal amounts.

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.His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA.The fourth journal entry in the payroll cycle to record the employer's payroll taxes should include which of the following?

Which of the following is a reason that many companies require a photo ID when employees pick up their paychecks?

On March 1,2012,Archer Sales purchases inventory for $200,000 by signing a note payable.The note is for 3 months and bears interest at a rate of 9%.Please provide the journal entry at the end of May when the note is settled.

A certain contingent liability was evaluated at year-end,and considered to have a remote possibility of becoming an actual liability.If the accountant decided NOT to report it on the balance sheet or in the notes to the financial statement,what effect would this have on the financial reporting of the company?

Which of the following are deducted to arrive at an employee's net pay?

Tom's gross pay for this month is $8,150.His gross pay year-to-date,prior to this month totaled $101,000.What is the amount of FICA withheld from Tom's pay for this month?

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

When the likelihood of an actual loss is probable,and the amount can be estimated,it should be recorded as an expense and as a liability.

Which of the following is an amount for products or services purchased on account?

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 Cash for $950.

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 the tax liability to the government includes a credit to Cash for $1,332.

Which of the following is an important aspect of control over payroll?

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

The journal entry for accrued interest on a note payable includes: