Exam 8: Current and Contingent Liabilities

Monthly sales are $530,000.Warranty costs are estimated at 5% of monthly sales.Warranties are honored with replacement products.No defective products are returned during the month.At the end of the month,the company should record a journal entry with a credit to:

On December 31st,Baxtor,Inc.has cost of goods sold of $310,000,ending inventory is $18,000,beginning inventory is $23,000;and average accounts payable is $89,000.What is the accounts payable turnover expressed as days?

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

Short-term notes payable would typically be used to purchase inventory or pay operating expenses.

The most frequently used current liabilities are accounts receivable and notes receivable.

Devin's Animal Shop has the following information for the pay period of March 15 to March 31: Required: Prepare the journal entry to record the accrued payroll on March 31 and the journal entry to remit the payroll taxes to the government on April 15.Omit explanations.Do not record employer payroll taxes.

Current liabilities are usually associated with:

The accounts payable turnover is calculated by purchases from suppliers divided by:

A potential obligation that depends on the future outcome of past events is a contingent liability.

A company has a pending lawsuit that has a remote possibility of being settled in favor of the plaintiff who is a former employee.What should the company do?

Total wages employees earned for the payroll period are called ________.The amount of wages the employees take home is the ________.