Question 1

A contingent liability is:

Accepted Answer

A)  Always of a specific amount. 
B)  A potential obligation that depends on a future event arising from a past transaction or event. 
C)  An obligation not requiring future payment. 
D)  An obligation arising from the purchase of goods or services on credit. 
E)  An obligation arising from a future event. 
A)  Always of a specific amount. 
B)  A potential obligation that depends on a future event arising from a past transaction or event. 
C)  An obligation not requiring future payment. 
D)  An obligation arising from the purchase of goods or services on credit. 
E)  An obligation arising from a future event.

Question 2

On June 1,Jasper Company signed a $25,000,120-day,6% note payable to cover a past due account payable.
a.What is the total amount of interest to be paid on this note?
b.Prepare Jasper Company's general journal entry to record the issuance of the note payable.
c.Prepare Jasper Company's general journal entry to record the payment of the note on September 29.

Accepted Answer

None

Question 3

What are estimated liabilities? Cite at least two examples and explain why they are classified as estimated liabilities.

Accepted Answer

Estimated liabilities are known obligati

Question 4

Employer payroll taxes are an added employee ________ beyond the wages and salaries earned by the employees.

Accepted Answer

The answer of Employer payroll taxes are an added employee...

Question 5

An employee earns $9,450 for the current period.The cumulative earnings of previous pay periods is $110,000.Social security tax applies to the first $118,500 of employee earnings.Calculate the total and individual amounts to be withheld for social security (6.2%),Medicare (1.45%)and federal income tax (15%).

Accepted Answer

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Question 6

Cardinal Company sells merchandise for $24,000 cash on March 31 (cost of merchandise is $12,300).The sales tax law requires Cardinal to collect 8.5% sales tax on every dollar of merchandise sold.Record the entry for the sale and its applicable sales tax.(Assume the company uses the periodic inventory method to keep track of inventory)

Accepted Answer

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Question 7

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 account.What is the journal entry that Indigo Company would make,when it records payment of the note on the maturity date? (Use 360 days a year.)

Accepted Answer

A)  Debit Notes Payable $4,500; debit Interest Expense $75; credit Cash $4,575. 
B)  Debit Notes Payable $4,500; credit Interest Expense $75, credit Cash $4,425. 
C)  Debit Cash $4,575; credit Interest Revenue $75; credit Notes Payable $4,500. 
D)  Debit Notes Payable $4,500; debit Interest Expense $112; credit Cash $4,612. 
E)  Debit Cash $4,575; credit Interest Revenue $75; credit Notes Receivable $4,500. 
A)  Debit Notes Payable $4,500; debit Interest Expense $75; credit Cash $4,575. 
B)  Debit Notes Payable $4,500; credit Interest Expense $75, credit Cash $4,425. 
C)  Debit Cash $4,575; credit Interest Revenue $75; credit Notes Payable $4,500. 
D)  Debit Notes Payable $4,500; debit Interest Expense $112; credit Cash $4,612. 
E)  Debit Cash $4,575; credit Interest Revenue $75; credit Notes Receivable $4,500.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Each employee records the number of withholding allowances claimed on the withholding allowance certificate that is filed with the employer,which is the Form W-4.

Accepted Answer

A) True 
 B)False

Question 10

Match each of the following terms with the appropriate definitions.
-A number indicated on an employee's Form W-4 that is used to reduce the amount of federal income tax withheld from an employee's pay.

Accepted Answer

A) Long-term liability 
B) Warranty 
C) FUTA taxes 
D) FICA taxes 
E) Contingent liability
F)Net pay
G)Withholding allowance
H)Estimated liability
I)Merit rating
J)Wage bracket withholding table 
A) Long-term liability 
B) Warranty 
C) FUTA taxes 
D) FICA taxes 
E) Contingent liability
F)Net pay
G)Withholding allowance
H)Estimated liability
I)Merit rating
J)Wage bracket withholding table

Question 11

Employer payroll taxes:

Accepted Answer

A)  Are added expenses beyond that for the wages and salaries earned by employees. 
B)  Represent the federal taxes withheld from employees. 
C)  Represent the social security taxes withheld from employees. 
D)  Are paid by the employee. 
E)  Are payable for up to a maximum $117,000 of employee earnings. 
A)  Are added expenses beyond that for the wages and salaries earned by employees. 
B)  Represent the federal taxes withheld from employees. 
C)  Represent the social security taxes withheld from employees. 
D)  Are paid by the employee. 
E)  Are payable for up to a maximum $117,000 of employee earnings.

Question 12

A company has 90 employees and a weekly payroll of $117,000.The FICA-social security tax withheld totals $7,254 and the FICA-Medicare tax withheld totals $1,696.50.The total withholding for federal income tax is $16,500.Prepare the journal entry to accrue this week's salaries expense and withholdings.

Accepted Answer

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\text { Salarie

Question 13

Match the following items with the appropriate designation (Estimated liability, Contingent liability, or Known liability).
-Vacation benefits

Accepted Answer

A) Contingent liability 
B) Estimated liability 
C) Known liability 
A) Contingent liability 
B) Estimated liability 
C) Known liability

Question 14

Match each of the following terms with the appropriate definitions.
-Known obligations of an uncertain amount that can be reasonably estimated.

Accepted Answer

A) Long-term liability 
B) Warranty 
C) FUTA taxes 
D) FICA taxes 
E) Contingent liability
F)Net pay
G)Withholding allowance
H)Estimated liability
I)Merit rating
J)Wage bracket withholding table 
A) Long-term liability 
B) Warranty 
C) FUTA taxes 
D) FICA taxes 
E) Contingent liability
F)Net pay
G)Withholding allowance
H)Estimated liability
I)Merit rating
J)Wage bracket withholding table

Question 15

In the accounting records of a defendant,lawsuits:

Accepted Answer

A)  Are estimated liabilities. 
B)  Should always be recorded. 
C)  Should always be disclosed. 
D)  Should be recorded if payment for damages is probable and the amount can be reasonably estimated. 
E)  Should never be recorded. 
A)  Are estimated liabilities. 
B)  Should always be recorded. 
C)  Should always be disclosed. 
D)  Should be recorded if payment for damages is probable and the amount can be reasonably estimated. 
E)  Should never be recorded.

Question 16

Portia Grant is an employee who is paid monthly.For the month of January of the current year,she earned a total of $8,260.The FICA tax for social security is 6.2% of the first $118,500 of employee earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings.The FUTA tax rate of .6% and the SUTA tax rate of 5.4% are applied to the first $7,000 of an employee's pay.The amount of federal income tax withheld from her earnings was $1,325.17.Her net pay for the month is: (Round your intermediate calculations to two decimal places.)

Accepted Answer

A)  $6,422.71 
B)  $6,246.94 
C)  $6,302.94 
D)  $5,868.94 
E)  $7,194.11 
A)  $6,422.71 
B)  $6,246.94 
C)  $6,302.94 
D)  $5,868.94 
E)  $7,194.11

Question 17

All of the following statements related to recording warranty expense are true except:

Accepted Answer

A)  Recording estimated warranty expense complies with the full disclosure principle. 
B)  Warranty expense should be recorded in the period when the warranty service is performed. 
C)  Recording estimated warranty expense complies with the matching principle. 
D)  The seller reports a warranty obligation as a liability. 
E)  Warranty costs are probable and the amount can be estimated. 
A)  Recording estimated warranty expense complies with the full disclosure principle. 
B)  Warranty expense should be recorded in the period when the warranty service is performed. 
C)  Recording estimated warranty expense complies with the matching principle. 
D)  The seller reports a warranty obligation as a liability. 
E)  Warranty costs are probable and the amount can be estimated.

Question 18

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 $118,500 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?

Accepted Answer

A)  $101.50 
B)  $56.00 
C)  $378.00 
D)  $434.00 
E)  $0.00 
A)  $101.50 
B)  $56.00 
C)  $378.00 
D)  $434.00 
E)  $0.00

Question 19

Match each of the following terms with the appropriate definitions.
-Payments of income taxes that are deferred until future years because of temporary differences between GAAP and tax accounting rules.

Accepted Answer

A) Short-term note payable 
B) Deferred income tax liability 
C) Current liabilities 
D) Warranty 
E) Employee benefits
F)Federal depository bank
G)Payroll register
H)Gross pay
I)Payroll bank account
J)Times interest earned 
A) Short-term note payable 
B) Deferred income tax liability 
C) Current liabilities 
D) Warranty 
E) Employee benefits
F)Federal depository bank
G)Payroll register
H)Gross pay
I)Payroll bank account
J)Times interest earned

Question 20

Athena Company's salaried employees earn two weeks of vacation per year.It pays $858,000 in total employee salaries for 52 weeks but its employees work only 50.Record Athena Company's weekly journal entry to record the vacation expense:

Accepted Answer

A)  Debit Vacation Benefits Expense $16,500; credit Vacation Benefits Payable $16,500. 
B)  Debit Vacation Benefits Expense $660; credit Vacation Benefits Payable $660. 
C)  Debit Vacation Benefits Expense $17,160; credit Vacation Benefits Payable $17,160. 
D)  Debit Vacation Benefits Payable $660; credit Vacation Benefits Expense $660. 
E)  Debit Vacation Benefits Payable $16,500; credit Vacation Benefits Expense $16,500. 
A)  Debit Vacation Benefits Expense $16,500; credit Vacation Benefits Payable $16,500. 
B)  Debit Vacation Benefits Expense $660; credit Vacation Benefits Payable $660. 
C)  Debit Vacation Benefits Expense $17,160; credit Vacation Benefits Payable $17,160. 
D)  Debit Vacation Benefits Payable $660; credit Vacation Benefits Expense $660. 
E)  Debit Vacation Benefits Payable $16,500; credit Vacation Benefits Expense $16,500.

A contingent liability is:

What are estimated liabilities? Cite at least two examples and explain why they are classified as estimated liabilities.

Employer payroll taxes are an added employee ________ beyond the wages and salaries earned by the employees.

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 account.What is the journal entry that Indigo Company would make,when it records payment of the note on the maturity date? (Use 360 days a year.)

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

Each employee records the number of withholding allowances claimed on the withholding allowance certificate that is filed with the employer,which is the Form W-4.

Match each of the following terms with the appropriate definitions. -A number indicated on an employee's Form W-4 that is used to reduce the amount of federal income tax withheld from an employee's pay.

Employer payroll taxes:

Match the following items with the appropriate designation (Estimated liability, Contingent liability, or Known liability). -Vacation benefits

Match each of the following terms with the appropriate definitions. -Known obligations of an uncertain amount that can be reasonably estimated.

In the accounting records of a defendant,lawsuits:

All of the following statements related to recording warranty expense are true except:

Match each of the following terms with the appropriate definitions. -Payments of income taxes that are deferred until future years because of temporary differences between GAAP and tax accounting rules.

Athena Company's salaried employees earn two weeks of vacation per year.It pays $858,000 in total employee salaries for 52 weeks but its employees work only 50.Record Athena Company's weekly journal entry to record the vacation expense:

Accounting in Business

Analyzing for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash, fraud, and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Investments

Partnership Accounting

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Exam 9: Accounting for Current Liabilities

A contingent liability is:

What are estimated liabilities? Cite at least two examples and explain why they are classified as estimated liabilities.

Employer payroll taxes are an added employee ________ beyond the wages and salaries earned by the employees.

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 account.What is the journal entry that Indigo Company would make,when it records payment of the note on the maturity date? (Use 360 days a year.)

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

Each employee records the number of withholding allowances claimed on the withholding allowance certificate that is filed with the employer,which is the Form W-4.

Match each of the following terms with the appropriate definitions. -A number indicated on an employee's Form W-4 that is used to reduce the amount of federal income tax withheld from an employee's pay.

Employer payroll taxes:

Match the following items with the appropriate designation (Estimated liability, Contingent liability, or Known liability). -Vacation benefits

Match each of the following terms with the appropriate definitions. -Known obligations of an uncertain amount that can be reasonably estimated.

In the accounting records of a defendant,lawsuits:

All of the following statements related to recording warranty expense are true except:

Match each of the following terms with the appropriate definitions. -Payments of income taxes that are deferred until future years because of temporary differences between GAAP and tax accounting rules.

Athena Company's salaried employees earn two weeks of vacation per year.It pays $858,000 in total employee salaries for 52 weeks but its employees work only 50.Record Athena Company's weekly journal entry to record the vacation expense:

Accounting in Business

Analyzing for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash, fraud, and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Investments

Partnership Accounting

Filters