Exam 9: Accounting for Current Liabilities

On May 22,Jarrett Company borrows $7,500 from Fairmont Financing,signing a 90-day,8%,$7,500 note.What is the journal entry needed to record the payment of the note by Jarrett Company on the maturity date?

Obligations not expected to be paid within the longer of one year or the company's operating cycle are reported as:

Times interest earned is calculated by:

Identify and discuss the factors involved in computing federal income taxes withheld from employees.

Carson Company faces a probable loss on a pending lawsuit where the amount of the loss is estimated to be $500,000.The journal entry to recognize the potential loss is:

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 $118,500 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?

If a company has advance subscription sales totaling $45,000 for the upcoming year when four quarterly journals will mailed to customers,the receipt of cash would be journalized as:

Match each of the following terms with the appropriate definitions. -Compensation provided to employees beyond salaries and wages,such as premiums for medical insurance and contributions to pension plans.

The total compensation an employee earns including wages,salaries,commissions,bonuses,and any compensation earned before deductions such as taxes is called ________.

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.

If a company uses a special payroll bank account:

A company has a selling price of $1,800 each for its printers.Each printer has a 2 year warranty that covers replacement of defective parts.It is estimated that 2% of all printers sold will be returned under the warranty at an average cost of $150 each.During November,the company sold 30,000 printers,and 400 printers were serviced under the warranty at a total cost of $55,000.The balance in the Estimated Warranty Liability account at November 1 was $29,000.What is the company's warranty expense for the month of November?

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?

Payroll is an example of a contingent liability for the employer.

The state unemployment tax rates applied to an employer are adjusted according to an employer's merit rating.

The full disclosure principle requires the reporting of contingent liabilities that are reasonably possible.

Uncertainties from the development of new competing products are not contingent liabilities.

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

Accrued vacation benefits are a form of estimated liability for an employer.

Contingent liabilities must be recorded if: