Exam 11: Current Liabilities and Payroll Accounting

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 upon signing the note?

A ________ is a seller's obligation to replace or correct a product or service that fails to perform as expected within a specified period.

Amounts received in advance from customers for future products or services:

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 company's income before interest expense and taxes is $250,000 and its interest expense is $100,000. Its times interest earned ratio is 2.5.

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

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:

Which of the following is not true regarding the unemployment insurance program?

Kelso had income before interest expense and income taxes of $570 million and interest expense of $37 million. Calculate Kelso' times interest earned.

A company's fixed interest expense is $8,000, its income before interest expense and income taxes is $32,000. Its net income is $9,600. The company's times interest earned ratio equals:

Hollow Company provides you with following information for two of its employees. The company is subject to the following taxes. Tax Rate Applied To FICA-Social Security 6.20\% First \1 18,500 FICA-Medicare 1.45\% All gross pay FUTA 0.60\% First \7 ,000 SUTA 3.20\% First \ 7,000 Compute amounts for each of these four taxes as applied to each employee's gross earnings for November. Gross Pay through October Gross Pay for November a. \ 6,400 \ 2,000 b. \ 112,000 \ 9,400

Recording employee payroll deductions may involve:

Trade accounts payable are amounts owed to suppliers for products or services purchased on credit.

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.

Triston Vale is paid on a monthly basis. For the month of January of the current year, he earned a total of $5,210. FICA tax for Social Security is 6.2% on the first $118,500 of earnings each calendar year and the FICA tax for Medicare is 1.45% of all earnings. The 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 amount of Federal Income Tax withheld from his earnings was $885.70. What is the amount of the employer's payroll taxes expenses for this employee?

A company's income before interest expense and income taxes in 2014 and 2015 is $225,000 and $250,000, respectively. Its interest expense was $45,000 for both years. Calculate the company's times interest earned ratio, and comment on its level of risk.

On December 1, Victoria Company signed a 90-day, 6% note payable, with a face value of $15,000. What amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)

A liability is incurred when income is earned because income tax expense is created by earning income.

Contingent liabilities must be recorded if:

A company's had fixed interest expense of $5,000, its income before interest expense and income taxes is $17,000, and its net income is $9,400. The company's times interest earned ratio equals: