Exam 7: Accounting for Liabilities

The following data comes from the payroll department of LoJack Corporation for the last pay period of 2011.Employees will not be paid until 2012. Required: 1.Determine the amount the balance sheet will report as Wages payable. 2.Determine the amount the income statement will report as Wages expense from this pay period. 3.What type of liability is Wages payable? 4.To what party must the company pay the FICA taxes? 5.Why does LoJack have to withhold taxes from its employees?

Albert,the accountant,has been asked by his boss to calculate the net pay for each of Pinnock Company's three employees.Albert has gathered the following information about payroll for the period: Required: Calculate the net pay for each of the employees.Assume that FICA (Social Security)taxes are withheld at the rate of 6.2% of gross pay and that Medicare taxes are withheld at the rate of 1.45% of gross pay.

On January 1,2011,Zenith,Inc.signed a $200,000,5%,20-year mortgage note to buy a new office building.The mortgage will be repaid in a series of twenty equal annual installment payments.Over the 20-year period,as each installment payment is made,the portion of the payment that is interest expense will ________.

Calculate the proceeds for each of the following bond issues AND put an X in the appropriate box to show if the bonds sell at a premium,at a discount,or at par:

Use the following information taken from a financial website to answer the following question(s): -Refer to the information above.Is Ford MTR's coupon rate higher or lower than the market rate of interest for bonds with a CCC rating?

Chase Challengingware Store had $500,000 in total assets,$175,000 in total liabilities,and $325,000 in shareholders' equity.Interest expense for the period was $7,500.Income from operations was $50,000.Calculate the debt-to-equity ratio.Round your answer to the nearest tenth of a percent.

On SEPTEMBER 30,2011,Ace Electronics issued $100,000 of 10-year,8% bonds at 100.The bonds pay interest semiannually on September 30 and March 31.On its income statement for the year ended December 31,2011,the year the bonds were issued,Ace Electronics will show Interest expense of ________.

When a bond sells for 99,the bond is selling at ________.

On SEPTEMBER 30,2011,Ace Electronics issued $100,000 of 10-year,8% bonds at 100.The bonds pay interest semiannually on September 30 and March 31.On its statement of cash flows for the year ended December 31,2011,Ace will show Cash paid for interest of ________.

When company's debt-to-equity ratio is greater than 100% than its current ratio must be greater than 1.0 to 1.

On January 1,Bank,Rupp & Baroque,Inc.issued $50,000 worth of 10-year,9% bonds for $48,890.What is the amount of the first year's interest payment?

On January 1,2011,Ace Electronics borrowed $40,000 on a five-year,7% note.The loan will be repaid in 5 equal installments of $9,756 each year,beginning on December 31,2011.On its statement of cash flows for the year ended December 31,2011,Ace will show cash paid for interest as ________ activity.

When a bond sells at more than its face amount,the market rate of interest is ________.

If a company earns more with the money it borrows than it has to pay to borrow that money,it has positive financial leverage.

Secured loans give the bondholders a claim to a specific asset of the company in case of default.

In December 2011,Homer Simpson worked for Springfield Power and earned $5,000.Federal income tax withholding is 15%.The FICA rate is 6.2% and the Medicare tax is 1.45%.How much cash will Springfield Power pay the government for Medicare tax because of Homer's December earnings?

Off-balance-sheet financing is always illegal.

In December 2011,B.Rich worked for Payless,Inc.and earned $10,000.Federal income tax withholding is 20%.The FICA rate is 6.2% and the Medicare tax is 1.45%.How much cash will Payless pay the government for FICA because of B.Rich's December earnings?

Indicate with an "X" whether each description results in the reporting of a current liability,long-term liability,or neither on the company's Balance Sheet.Assume a December 31,2011 yearend.

On January 1,2011,Alpha Enterprise signed a $100,000,6%,20-year mortgage note to buy a new warehouse.The mortgage will be repaid in a series of twenty equal annual installment payments.Calculate the amount of each payment.Round your answer to the nearest dollar.