Question 1

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

Accepted Answer

The amount of federal income tax withhel

Question 2

Match each of the following terms with the appropriate definitions.
a. Employee benefits f. Gross pay
b. Short-term note payable g. Times interest earned
c. Payroll bank account h. Warranty
d. Federal depository bank i. Deferred income tax liability
e. Payroll register j. Current liabilities
_____ 1. A record for a pay period that shows the pay period dates, regular and overtime hours worked, gross pay, net pay and deductions.
_____ 2. Obligations due within one year or the company's operating cycle, whichever is longer.
_____ 3. A special bank account used solely for paying employees; each pay period an amount equal to the total employees' net pay is deposited and the employees' payroll checks are drawn on that account.
_____ 4. A seller's obligation to replace or correct a product or service that fails to perform as expected within a specified period.
_____ 5. Total compensation earned by an employee.
6. Compensation provided to employees beyond salaries and wages, such as premiums for medical insurance and contributions to pension plans.
_____ 7. Payments of income taxes that are deferred until future years because of temporary differences between GAAP and tax accounting rules.
_____ 8. A bank authorized to accept deposits of amounts payable to the federal government, including payroll taxes.
_____ 9. A calculation of a company's risk of its ability to pay interest when due.
10. A written promise to pay a specified amount on a definite future date within one year or the company's operating cycle, whichever is longer.

Accepted Answer

1. E; 2. J; 3. C; 4.

Question 3

Define liabilities and explain the difference between current and long-term liabilities.

Accepted Answer

Liabilities are probable future payments

Question 4

________ are amounts owed to suppliers for products or services purchased on credit.

Accepted Answer

Trade acco

Question 5

A company sold $12,000 worth of bicycles with an extended warranty. The company's experience is that warranty expense averages 2% of sales. The company should:

Accepted Answer

A)  Consider the warranty expense a remote liability since the rate is only 2%. 
B)  Recognize warranty expense and liability in the year of the sale. 
C)  Consider the warranty expense a contingent liability. 
D)  Recognize warranty expense at the time the warranty work is performed. 
E)  Recognize warranty liability when the company purchases the bicycles. 
A)  Consider the warranty expense a remote liability since the rate is only 2%. 
B)  Recognize warranty expense and liability in the year of the sale. 
C)  Consider the warranty expense a contingent liability. 
D)  Recognize warranty expense at the time the warranty work is performed. 
E)  Recognize warranty liability when the company purchases the bicycles.

Question 6

An employee earned $128,500 working for an employer in the current year. The current rate for FICA Social Security is 6.2% payable on earnings up to $118,500 maximum per year and the rate for FICA Medicare 1.45% of all earnings. The employer's total FICA payroll tax for this employee is:

Accepted Answer

A)  $9,210.25. 
B)  $9,830.25. 
C)  $8,950.50. 
D)  $879.75. 
E)  $0, since the FICA tax is only deducted from an employee's pay. 
A)  $9,210.25. 
B)  $9,830.25. 
C)  $8,950.50. 
D)  $879.75. 
E)  $0, since the FICA tax is only deducted from an employee's pay.

Question 7

Classify each of the following items as either:
A. Estimated liability
B. Contingent liability
C. Known liability
1. Lawsuit against the company
2. Warranty on products sold this year
3. Accounts payable
4. Income taxes payable
5. Vacation benefits
6. Accrued wages payable
7. Debt guarantees
8. Sales taxes payable
9. Payroll taxes payable
10. Unearned revenues

Accepted Answer

1. B; 2. A; 3. C; 4.

Question 8

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?

Accepted Answer

A)  $534.60. 
B)  $594.00. 
C)  $0.00. 
D)  $420.00. 
E)  $336.00. 
A)  $534.60. 
B)  $594.00. 
C)  $0.00. 
D)  $420.00. 
E)  $336.00.

Question 9

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 10

Companies may use a special bank account solely for the purpose of paying employees, by depositing an amount equal to the total employees' net pay into the account each pay period and drawing the employees' payroll checks on the account. This account is a(n):

Accepted Answer

A)  Payroll bank account. 
B)  Federal depository bank account. 
C)  Employee's Individual Earnings account. 
D)  Payroll register account. 
E)  Employees' bank account. 
A)  Payroll bank account. 
B)  Federal depository bank account. 
C)  Employee's Individual Earnings account. 
D)  Payroll register account. 
E)  Employees' bank account.

Question 11

FICA taxes include:

Accepted Answer

A)  Charitable giving. 
B)  Employee federal income tax. 
C)  Social Security and Medicare taxes. 
D)  Employee state income tax. 
E)  Federal and state unemployment taxes. 
A)  Charitable giving. 
B)  Employee federal income tax. 
C)  Social Security and Medicare taxes. 
D)  Employee state income tax. 
E)  Federal and state unemployment taxes.

Question 12

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:

Accepted Answer

A)  Debit Warranty Expense $17,800; credit Estimated Warranty Liability $17,800. 
B)  Debit Estimated Warranty Liability $17,800; credit Parts Inventory $17,800. 
C)  Debit Warranty Expense $9,400; credit Estimated Warranty Liability $9,400. 
D)  Debit Estimated Warranty Liability $9,400; credit Parts Inventory $9,400. 
E)  Debit Warranty Expense $14,400; credit Estimated Warranty Liability $14,400. 
A)  Debit Warranty Expense $17,800; credit Estimated Warranty Liability $17,800. 
B)  Debit Estimated Warranty Liability $17,800; credit Parts Inventory $17,800. 
C)  Debit Warranty Expense $9,400; credit Estimated Warranty Liability $9,400. 
D)  Debit Estimated Warranty Liability $9,400; credit Parts Inventory $9,400. 
E)  Debit Warranty Expense $14,400; credit Estimated Warranty Liability $14,400.

Question 13

Identify and explain the types of employer payroll taxes.

Accepted Answer

Employers are required to contribute an

Question 14

All of the following statements regarding FICA taxes are true except:

Accepted Answer

A)  The amount of FICA deducted from the employee is credited to a liability account. 
B)  FICA taxes are deducted from the employee. 
C)  Employers must pay withheld FICA taxes to the IRS. 
D)  A self-employed person is exempt from FICA taxes. 
E)  An employer must pay FICA taxes equal to the amount withheld from the employee. 
A)  The amount of FICA deducted from the employee is credited to a liability account. 
B)  FICA taxes are deducted from the employee. 
C)  Employers must pay withheld FICA taxes to the IRS. 
D)  A self-employed person is exempt from FICA taxes. 
E)  An employer must pay FICA taxes equal to the amount withheld from the employee.

Question 15

Vacation benefits is an example of a known liability.

Accepted Answer

A) True 
 B)False

Question 16

A ________ shows the pay period dates, hours worked, gross pay, deductions, and net pay of each employee for every pay period.

Accepted Answer

The answer of A ________ shows the pay period dates,...

Question 17

Employers must keep individual earnings reports for each employee.

Accepted Answer

A) True 
 B)False

Question 18

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. 
-Alan made the appropriate year-end accrual. What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made? (Use 360 days a year.)

Accepted Answer

A)  Debit Notes Payable $9,240; credit Interest Payable $120; credit Interest Expense $120; credit Cash $9,000. 
B)  Debit Notes Payable $9,000; debit Interest Payable $120; credit Cash $9,120. 
C)  Debit Notes Payable $9,000; debit Interest Expense $240; credit Cash $9,240. 
D)  Debit Notes Payable $9,000; debit Interest Payable $120; debit Interest Expense $120; credit Cash $9,240. 
E)  Debit Cash $9,240; credit Notes Payable $9,240. 
A)  Debit Notes Payable $9,240; credit Interest Payable $120; credit Interest Expense $120; credit Cash $9,000. 
B)  Debit Notes Payable $9,000; debit Interest Payable $120; credit Cash $9,120. 
C)  Debit Notes Payable $9,000; debit Interest Expense $240; credit Cash $9,240. 
D)  Debit Notes Payable $9,000; debit Interest Payable $120; debit Interest Expense $120; credit Cash $9,240. 
E)  Debit Cash $9,240; credit Notes Payable $9,240.

Question 19

__________are amounts received in advance from customers for future products or services.

Accepted Answer

The answer of  __________are amounts received in advance from...

Question 20

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

Exam 11: Current Liabilities and Payroll Accounting

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

Define liabilities and explain the difference between current and long-term liabilities.

________ are amounts owed to suppliers for products or services purchased on credit.

A company sold $12,000 worth of bicycles with an extended warranty. The company's experience is that warranty expense averages 2% of sales. The company should:

An employee earned $128,500 working for an employer in the current year. The current rate for FICA Social Security is 6.2% payable on earnings up to $118,500 maximum per year and the rate for FICA Medicare 1.45% of all earnings. The employer's total FICA payroll tax for this employee 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?

Companies may use a special bank account solely for the purpose of paying employees, by depositing an amount equal to the total employees' net pay into the account each pay period and drawing the employees' payroll checks on the account. This account is a(n):

FICA taxes include:

Identify and explain the types of employer payroll taxes.

All of the following statements regarding FICA taxes are true except:

Vacation benefits is an example of a known liability.

A ________ shows the pay period dates, hours worked, gross pay, deductions, and net pay of each employee for every pay period.

Employers must keep individual earnings reports for each employee.

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. -Alan made the appropriate year-end accrual. What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made? (Use 360 days a year.)

__________are amounts received in advance from customers for future products or services.

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

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Present and Future Values in Accounting

Activity-Based Costing

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