Exam 11: Current Liabilities and Payroll

Rambler Company reported sales revenue for 2019 of $903,000.The products were sold with a nine-month warranty.Members of Rambler's management estimate that the cost of the warranty will be equal to 7% of sales revenue.Which of the following will be included in the entry to record the actual amounts paid out as a result of warranty claims?

Sales revenue for a sporting goods store amounted to $526,000 for the current period.All sales are on account and are subject to a sales tax of 10%.Which of the following would be included in the journal entry to record the sales transaction?

The information related to interest expense of Classic Music,Inc.is given below: Net income \ 264,000 Income tax expense 107,000 Interest expense 66,000 Based on the above data,which of the following is the times-interest-earned ratio? (Round the final answer to two decimal places.)

On October 1,2019,Norway Company borrowed $225,000 by signing a nine-month,8% note payable.Interest was accrued on December 31,2019.Prepare the journal entry on July,1,2020,the date the note was paid.Omit explanation.

Regarding net pay,which of the following statements is incorrect?

A ________ is a schedule that summarizes the earnings,withholdings,and net pay for each employee.

The entry to accrue the warranty payable includes a credit to Warranty Expense.

To compute the interest for notes payable,multiply principal times the annual rate of interest.

Restaurant Foods Company had cash sales of $598,000 during the month of August.Sales taxes of 6.5% were collected on the sales.Prepare the journal entry to record the sales revenue and sales tax for the month.Omit explanation.

All earnings are subject to Medicare tax.

If a business knows that a liability exists but does not know the exact amount,the business is unable to record the liability.

Investors use the times-interest-earned ratio to evaluate a company's ability to pay interest expense.

Which of the following statements regarding vacation benefits is correct?

Employer FICA is paid by the employer and recorded as a payroll tax expense.

Which of the following is an example of an estimable probable contingency?

Tony's gross pay for the month is $2700.Tony's deduction for federal income tax is based on a rate of 21%.Tom has no voluntary deductions.Tony's year-to-date pay is under the limit for OASDI.What is the amount of FICA tax withheld from Tony's pay? (Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%.Do not round any intermediate calculations,and round your final answer to the nearest cent.)

Harrison,an employee of Safe Associates,Inc.,has gross salary for March of $4,000.The entire amount is under the OASDI limit of $118,500 and thus subject to FICA.He is also subject to federal income tax at a rate of 18%.Harrison has a deduction of $320 for health insurance and $80 for United Way.Which of the following is included in the entry to record the disbursement of his net pay?

Unearned revenue,for services to be performed in six months,appears on the balance sheet as ________.

The matching principle requires businesses to report Warranty Expense ________.

Martin Company decided to reward its employees with a bonus of 7% on annual net income,after deducting the bonus.The company reported net income of $513,600 before the calculation of the bonus.Prepare the journal entry to accrue employee bonus expense.Omit explanation.