Exam 9: Accounting for Current Liabilities

Athens Company's salaried employees earn two weeks of vacation per year.The company estimated and must expense $6,600 of accrued vacation benefits for the year.Which of the following is the necessary year-end adjusting entry to record accrued vacation benefits?

The times interest earned ratio is calculated by dividing interest expense by income before interest expense,depreciation,and income taxes.

During the first week of January,an employee works 46 hours.For this company,workers earn 150% of their regular rate for hours in excess of 40 per week.Her pay rate is $16 per hour,and her wages are subject to no deductions other than FICA Social Security,FICA Medicare,and federal income taxes.The tax rate for Social Security is 6.2% of the first $128,400 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings.The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both unemployment taxes are applied to the first $7,000 of an employee's pay.The employee has $80 in federal income taxes withheld.What is the amount of this employee's net pay for the first week of January? (Round your intermediate calculations to two decimal places.)

Debt guarantees are usually disclosed in the financial statement notes as a contingent liability.

Sales taxes payable is reported as a(n):

Floral Depot's income before interest expense and income taxes was $5,900 million,and interest expense was $38 million.Calculate Floral Depot's times interest earned.

On November 1,Alan Company signed a 120-day,8% note payable,with a face value of $9,000.What is the maturity value (principal plus interest)of the note on March 1? (Use 360 days a year.)

Employer payroll taxes:

Cantrell Company is required by law to collect and remit sales taxes to the state.If Cantrell has $8,000 of cash sales that are subject to an 8% sales tax,what is the journal entry to record the cash sales?

The annual Federal Unemployment Tax Return is:

A company's employer payroll tax rates are 0.6% for federal unemployment taxes,5.4% for state unemployment taxes,6.2% for FICA social security taxes on earnings up to $128,400,and 1.45% for FICA Medicare taxes on all earnings.Compute the W-2 Wage and Tax Statement information required below for the following employees:

Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $32,500 to be paid during January of the following year.The journal entry on December 31 to record the bonuses is:

Classify each of the following items as either: A.Current liability B.Long-term liability C.Not a liability 1.60-day note payable 2.A loan due in 3 months 3.Salaries payable 4.Debt guarantees 5.FICA taxes payable 6.Income taxes payable 7.A note payable due in 45 days 8.A loan due in 10 years 9.Warranty work completed this year 10.Accounts payable

Sales Taxes Payable is debited and Cash is credited when companies send sales taxes collected from customers to the government.

A contingent liability is a potential obligation that depends on a future event arising from a past transaction or event.

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 estimated warranty expense for the month is:

An employee earned $62,500 during the year working for an employer.The FICA tax rate for Social Security is 6.2% of the first $128,400 of employee earnings per calendar year and the FICA tax rate for Medicare is 1.45% of all earnings.The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both unemployment taxes are applied to the first $7,000 of an employee's pay.What is the amount of total unemployment taxes the employee must pay?

The rate that a state assigns reflecting a company's stability or instability in employing workers is the:

An employee earned $43,300 working for an employer in the current year.The current rate for FICA Social Security is 6.2% payable on earnings up to $128,400 maximum per year and the rate for FICA Medicare 1.45%.The employer's total FICA payroll tax for this employee is:

Belkin Co.provides medical care and insurance benefits to its retirees.In the current year,Belkin agrees to contribute 5% of the employees' $250,000 gross salaries to a retirement program.What is the amount of employee benefits expense for the current period?