Exam 11: Current Liabilities and Payroll

The matching principle requires businesses to record Warranty Expense:

Rocco worked 43 hours at his job during the first week of March, 2015. He is paid $14.5 per hour and receives overtime at the rate of time-and-one-half for hours worked over 40. Rocco pays income taxes at 15% and 5.65% for OASDI and Medicare. All of his income is taxable for FICA. What is Rocco's net pay?

Which of the following is paid by the employer only?

The times-interest-earned ratio is calculated as:

Which of the following is true of good internal controls over payroll?

Art Panache is the sole employee of Panache Sales. His employer pays a portion of his health insurance premium, and also contributes to a retirement plan in his name. The company's share of the health insurance premium is $600, and the company's contribution to the retirement plan is $780. The journal entry in the payroll cycle to record the employee benefits to be paid by the company should include a debit to Employee Health Insurance Payable for $1,380.

Ben Inc. recently signed a $350,000, six-month note on August 22, 2013. The interest rate is 6.5%. How much total interest will be due on the note at maturity?

The Statewide Sales Company has gross salaries and wages for March of $45,000. Provide the journal entry to record salaries and wages expense and payroll withholdings. (Assume a FICA-OASDI Tax of 4.2% and FICA-Medicare Tax of 1.45%.)Salaries and wages to date are under the OASDI limit. Assume no federal or state income taxes are due.

Synergy Appliances sells dishwashers with a 4-year warranty. In 2013, sales revenue for dishwashers is $85,000. The company estimates warranty expense at 4.5% of revenues. What is the 2013 warranty expense?

For the month of September, Countrywide Sales Company recorded gross pay of $58,750. The net pay for the month amounted to $56,000. The company decided to pay the salaries on October 5. Which of the following is the journal entry for the payment of salaries?

Sara Digital starts the year with $2,500 in its Estimated Warranty Payable account. During the year, there were $210,000 of sales and $4,500 of warranty repair payments. Sara Digital estimates warranty expense at 2% of sales. The journal entry to record this will include a debit to Warranty Expense for:

Sara Digital starts the year with $2,500 in its Estimated Warranty Payable account. During the year, there were $210,000 of sales and $4,500 of warranty repair payments. Sara Digital estimates warranty expense at 2% of sales. At the end of the year, what was the balance in the Estimated Warranty Payable account?

A high interest-coverage ratio indicates a business's difficulty in paying interest expense.

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

The Bergan Corp. has gross pay for March of $50,000. The journal entry in the payroll cycle to record salary expense would include a debit to Salaries and Wages Payable for $50,000.

Tryst Inc. has a policy of accruing $1,500 for every employee as a vacation benefit. Sarah, an employee, took a vacation. Which of the following is the correct journal entry for the vacation benefit paid?

Federal income taxes are:

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

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 $110,100, 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. Which of the following is included in the entry in the payroll cycle to record the disbursement of his net pay?

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?