Exam 9: Accounting for Current Liabilities

The amount of federal income tax withheld from employee pay depends on the employee's income and the number of withholding allowances claimed by the employee.

Accounts payable are:

A company's income before interest expense and income taxes is $350,000 and its interest expense is $100,000.Its times interest earned ratio is:

The Federal Insurance Contributions Act (FICA)requires that each employer file a:

If a company uses a special payroll bank account:

On December 1,Watson Enterprises signed a $24,000,60-day,4% note payable as replacement of an account payable with Erikson Company.What is the journal entry that should be recorded by Watson Enterprises upon signing the note?

Companies with many employees rarely use a special payroll bank account from which to pay employees.

If a company has advance ticket sales totaling $2,000,000 for the upcoming football season,the receipt of cash would be journalized as:

A company cannot have a liability if the amount of the obligation is unknown.

Employers keep employee earnings reports which include a cumulative record of an employee's hours worked,gross earnings,deductions,and net pay.

An estimated liability:

On September 1,Knack Company signed a $50,000,90-day,5% note payable with Central Savings Bank.What is the journal entry that should be recorded by Knack upon maturity of the note? (Use 360 days a year.)

Identify each of the following payroll taxes as an (A)Employer Payroll Tax,(B)Employee Payroll Tax,or (C)Both. 1.FICA-Social Security taxes 2.FICA-Medicare taxes 3.FUTA (federal unemployment taxes) 4.SUTA (state unemployment taxes) 5.Employee federal income taxes 6.Employee state and local income taxes

On April 12,Hong Company agrees to accept a 60-day,10%,$4,500 note from Indigo Company to extend the due date on an overdue accounts payable.What is the journal entry needed to record the transaction by Indigo Company?

Richardson Fields receives $31,680 cash in advance ticket sales for 11 home soccer games.Record the advance ticket sales on March 31.Record the revenue earned for the first game played on August 17.

A contingent liability is a potential obligation that is based on uncertainties surrounding future technologies and natural disasters.

A company has advance subscription sales totaling $45,000 for the upcoming year when four quarterly journals will mailed to customers.When the company mails the first quarterly journal to customers,it should record:

During August,Boxer Company sells $356,000 in merchandise that has a one year warranty.Experience shows that warranty expenses average about 5% of the selling price.The warranty liability account has a credit balance of $12,800 before adjustment.Customers returned merchandise for warranty repairs during the month that used $9,400 in parts for repairs.The entry to record the customer warranty repairs is:

The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both taxes are applied to the first $7,000 of an employee's pay.Assume that an employee earned total wages of $9,900.What is the amount of total unemployment taxes the employer must pay on this employee's wages?

The difference between the amount received from issuing a note payable and the amount repaid at maturity is referred to as: