Exam 11: Current Liabilities and Payroll

On April 10, 2013, Peter Services received $4,800 in advance from a customer for one month's service, to be provided April 10, 2013 to May 10, 2013. What would be the journal entry to adjust the accounts at the end of April?

Katie Pereira and Ferro Schwartz are the only two employees of Free Star Company. In February, 2013, Katie's gross pay was $5,500 and Ferro's gross pay was $5,900. All earnings are subject to FICA-OASDI Tax of 4.2% and FICA-Medicare Tax of 1.45%. Which of the following would be included in the entry to record the salary expense for February?

Jane Services sells a service plan for commercial computer maintenance. The price is $1,350 per year, paid in advance. On October 1, 2015, Jane sells a service plan to a new customer for cash, and the plan covers the period October 1, 2015 to September 30, 2016. Provide the journal entry to record the adjustment needed on December 31, 2015.

On December 31, 2014, Ferrero Inc. borrowed $500,000 by signing a note payable. The note is for 5 years and bears interest at the rate of 8%. The note is payable in 5 yearly installments of $125,219 due at the end of every year beginning on December 31, 2015. What amount represents the current portion of Long-term Notes Payable at December 31, 2014?

________ is pay stated as a percentage of a sale amount.

On September 1, 2013, Ferrero Inc. borrowed $125,000 by signing a note payable. The note is for 9 months and bears interest at a rate of 7.2%. Provide the journal entry to accrue interest expense at the end of 2013.

A certain contingent liability was evaluated at year-end, and considered to have a reasonable 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 statements, this could be considered a violation of generally accepted accounting principles.

Employer FICA is a tax expense that is paid out by the employer and recorded as a payroll tax expense.

On July 1, 2013, Ferrero Inc. purchased merchandise inventory for $350,000 by signing a note payable. The note is for 6 months and bears interest at a rate of 8%. Provide the journal entry for this transaction, using a perpetual inventory system.

Jumbo Sales offers warranties on all their electronic goods. Warranty expense is estimated at 3% of sales revenue. In 2013, Jumbo had $595,000 of sales. In the same year, Jumbo paid out $8,500 of warranty payments. Which of the following is the entry needed to record the estimated warranty expense?

On October 1, 2014, Ferrero Inc. borrowed $225,000 by signing a note payable. The note is for 9 months and bears interest at a rate of 8%. The company properly accrued interest at the end of 2014. Provide the journal entry at the end of June, 2015 when the note is settled.

Sales revenue for a sporting goods store amounted to $525,000 for the current period. All sales are on account and are subject to a sales tax of 9%. Which of the following would be included in the journal entry to record the sales?

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

Amounts owed for products or services purchased on account are accounts receivable.

A $30,000, three-month, 7% note payable was issued on December 1, 2015. What is the amount of accrued interest on December 31, 2015?

Felix Sales offers warranties on all their electronic goods. Warranty expense is estimated at 3.5% of sales revenue. In 2015, Felix had $333,000 of sales. In the same year, Felix paid out $8,750 of warranty payments. Provide the journal entry to record the disbursement of warranty payments.

Ragas Inc. sold goods worth $50,000 in the year 2013 and estimated 4% warranty expense for the year. Customers complained of defects and goods worth $1,500 had to be replaced. Which of the following is the correct the journal entry for honoring the warranties with goods?

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. His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA. Which of the following is a part of journal entry in the payroll cycle to record the employer's payroll taxes?

Amounts owed for products or services, due within one year, are current liabilities.

Jumbo Sales offers warranties on all their electronic goods. Warranty expense is estimated at 3% of sales revenue. In 2013, Jumbo had $595,000 of sales. In the same year, Jumbo paid out $8,500 of warranty payments. Which of the following is the entry needed to record the disbursement of warranty payments?