Exam 11: Current Liabilities and Payroll

Masterpiece Sales Company offers warranties on all their electronic goods.Warranty expense is estimated at 3% of sales revenue.In 2019,the company had $603,000 in sales.In the same year,Masterpiece Sales replaced defective goods with goods that had a cost of $16,500.Which of the following is the entry needed to record the replacement of the defective goods?

The times-interest-earned ratio is calculated as EBIT divided by interest expense.

There are numerous ways to label an employee's pay.Complete the table to show how each type of employee pay is generally labeled. Employee pay Generallylabeled as Wages Commission Bonus Benefits

If a business knows that a liability exists but does not know the exact amount,the business must estimate the amount of the liability and report it on the balance sheet.

Which of the following statements regarding Accounts Payable is incorrect?

Jason's gross pay for the week is $1900.His year-to-date pay is under the limit for OASDI.Assume that the rate for state and federal unemployment compensation taxes is 6% and that Jason's year-to-date pay has not yet exceeded the $7000 cap.What is the total amount of payroll taxes that his employer must record as payroll tax expenses? (Do not round your intermediate calculations.Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%.)

The times-interest-earned ratio is 6.25 for Retailer A and 5.1 for Retailer B.This indicates that Retailer B will find it easier to pay interest expense.

If the likelihood of a future event is probable and the amount of the expense cannot be estimated,how should the company report the contingency?

Federal unemployment compensation tax is paid by the employer and is not deducted from an employee's gross earnings.

McBride Industries completed the following transactions during 2018: Made sales of \ 10,000. McBride estimates that warranty expense is Oct. 1 5\% of sales. (Record only the warranty expense.) Oct. 24 Paid \ 250 to satisfy warranty claims. Dec. 31 Estimated vacation benefits expense to be \ 2,350. McBride expected to pay its employees a 4\% bonus on net income Dec. 31 after deducting the bonus. Net income for the year is \ 25,000. Journalize the transactions (explanations are not required).Round to the nearest dollar.

On August 31,2018,Allright Services received $3,500 in advance of performing the service.Which journal entry is needed to record the receipt of cash?

The IFRS definitions of current and long-term liabilities are much different than the U.S.GAAP definitions.

Contingencies that are reasonably possible have a greater chance of occurring but are not likely.

Amounts owed for products or services purchased on account are accounts receivable.

The income tax column in a payroll register includes the tax owed by the proprietor.

Metro Sales Company offers warranties on all its electronic goods.Warranty expense is estimated at 3.5% of sales revenue.In 2019,Metro had sales of $333,000.In the same year,Metro replaced defective goods with merchandise inventory costing $8,750.Prepare the journal entry to record the replacement of defective goods.Omit explanation.

The employee federal and state income tax and Social Security tax are optional payroll deductions.

Net pay is the total amount of compensation that an employee takes home after the deductions are made.

Extra compensation items that are not paid directly to an employee are called ________.

Which of the following is included in the entry to record estimated warranty payable?