Exam 11: Current Liabilities and Payroll

Joel,an employee of Cruise Travel,Inc.,has gross salary for March of $5,200.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 29%.His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA.The journal entry to record employer's payroll tax expense includes a credit to FICA-Medicare Taxes Payable for $150.80.(Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%.)

What is a contingent liability? Provide two examples of contingencies.

FICA tax is a tax that is paid both by the employer and the employee.

Which of the following is included in the entry to record accrual of warranty expense?

Venus Corp.sold goods,with a selling price of $17,221,for cash.The state sales tax rate is 8%.What amount is credited to the Sales Revenue account? (Round calculations to the nearest dollar.)

Cash received in advance of providing goods or performing services is recorded as ________.

Any portion of a long-term liability that is due with the next year is reported as a current liability.

Which of the following is TRUE of good internal controls over payroll?

Lawrence,an employee of Light,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.His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA.Which of the following is a part of the journal entry to record the employer's payroll taxes?

Brad's gross pay for the month is $15,400.His deduction for federal income tax is based on a rate of 18%.He has no voluntary deductions.His year-to-date pay is under the limit for OASDI.What is Brad's net 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 dollar.)

The information related to Jazz Music Company is given below: Year ended December Year ended December 31,2018 31,2019 Net Income \8 1,510 \2 10,570 Income Tax Expense 55,910 103,505 Interest Expense 6,595 59,505 Calculate the times-interest-earned ratio for each year.Round all calculations to two decimal places.

Fast Bikes Company offers warranties on all their bikes.They estimate warranty expense at 3.5% of sales.At the beginning of 2018,the Estimated Warranty Payable account had a credit balance of $1900.During the year,Fast Bikes had $296,000 in sales and had to pay out $5900 in warranty payments.At the end of the year,what is the ending balance in the Estimated Warranty Payable accounts?

Angie Pereira and Ferro Schwartz are employees of Free Star Company.In February 2019,Angie's gross pay was $6000,and Ferro's gross pay was $7400.All earnings are subject to FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%.Which of the following would be included in the entry to record the salaries expense for February?

Which of the following is a control procedure to prevent a dishonest employee from cashing a paycheck that was written to a fictitious person?

A journal entry is prepared to reclassify the current portion of a note payable.

Since a company usually does not know the amount of the year-end bonus at year-end,the company estimates the amount of the bonus based on a percentage.

A $54,000,four-month,12% note payable was issued on October 1,2018.Which of the following would be included in the journal entry required on the note's maturity date by the borrower? (Do not round any intermediate calculations,and round your final answer to the nearest dollar.)

Which of the following is pay over and above base salary,usually paid for exceptional performance?

Employer FICA tax is paid by the employer and is added to the employee's earnings.

John,an employee of Smith Electric,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%.John has a deduction of $320 for health insurance and $80 for United Way.Provide the journal entry to record salaries expense and payroll withholdings.(Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%.)Salaries will be paid at a later date.Omit explanation.