Exam 10: Current Liabilities and Fair Value Accounting

Margo Dhang is paid $8 per hour plus time-and-one-half for hours over 40 for a given week.During the week of January 21,Margo worked 46 hours.Social security taxes are 6.2 percent,Medicare taxes are 1.45 percent,$50 is withheld for federal income taxes,$12 is withheld for state income taxes,and $15 is withheld for medical insurance.In addition,Margo's employer must pay Social Security taxes of 6.2 percent,Medicare taxes of 1.45 percent,state unemployment taxes of 5.4 percent,and federal unemployment taxes of 0.8 percent.Calculate (a)Margo's gross earnings, (b)Margo's take-home pay, (c)the employer's payroll taxes expense,and (d)the total cost of employing Margo for the week.Round all amounts to the nearest penny.

Vacation pay is charged properly as an expense in the month in which the employee takes a vacation.

Failure to record a liability probably will

Accrued liabilities often arise as a result of the passage of time.

Which of the following most likely would be classified as a current liability?

Unearned revenue arises from the acceptance of payment in advance for a service to be performed.

Commercial paper consists of secured loans that are sold to the public.

Days' payable is the shortest in which of the following industries?

A company wishes to make annual contributions into a fund intended to retire $700,000 in debt five years from now.The amount to contribute each year equals $700,000

The future value of an ordinary annuity table would not include the factor

Only the unused portion of a line of credit is recognized as a liability.

A company receives $200,of which $8 is for sales tax and $12 is for excise tax.The journal entry to record the sale is:

The entry that includes a debit to Payroll Taxes and Benefits Expense would also include credits to Social Security Tax Payable and Medicare Tax Payable.

Which of the following is an example of a commitment?

In a deferred payment arrangement,interest is charged only if it is stated.

Contrast the accounting problems presented by definitely determinable liabilities and those associated with estimated liabilities.

Use this information to answer the following question. The following totals for the month of September were taken from the payroll register of Meadors Company: -The entry to record the accrual of federal unemployment tax (assume FUTA tax of 0.8 percent)would include a

Which of the following typically would not be done to satisfy a current liability?

Recording estimated product warranty expense in the year of the sale best follows which of the following accounting principles?

Which of the following is both an estimated liability and a contingent liability?