Exam 11: Current Liabilities and Payroll

One of the more popular defined contribution plans is the 401k plan.

A borrower has two alternatives for a loan: (a) issue a $480,000, 60-day, 8% note or (2) issue a $480,000, 60-day note that the creditor discounts at 8%. (Assume a 360-day year is used for interest calculations.) Required:

The amount of money a borrower receives from the lender is called discount rate.

Federal income taxes withheld increase the employer's payroll tax expense.

For an interest bearing note payable, the amount borrowed is equal to the face amount of the note.

The current assets and current liabilities for Kolbie Company and Newton Company are shown as follows at the end of 2012. *These represent prepaid expenses and other non-quick current assets. Required: (1) Determine the quick ratio for both companies. Round to two decimal places. (2) Interpret the quick ratio difference between the two companies.

While separation of duties may play a strong role in the internal control of inventory, it is significant in controlling payroll.

Internal controls for cash payments also apply to payrolls.

Current liabilities are:

Assuming a 360-day year, when a $40,000, 90-day, 9% interest-bearing note payable matures, total payment will amount to:

Carmen Flores' weekly gross earnings for the week ending Dec. 7th were $2,500, and her federal income tax withholding was $525. Prior to this week Flores had earned $98,000 for the year. Assuming the social security rate is 6% on the first $100,000 of annual earnings and Medicare is 1.5% of all earnings, what is Flores' net pay?

Which of the following is not an internal control procedure for payroll?

On October 30, Seba Salon, Inc. issued a 90-day note with a face amount of $60,000 to Reyes Products, Inc. for merchandise inventory. Assuming a 360-day year, determine the proceeds of the note assuming the note is discounted at 8%.

The current portion of long-term debt should

According to a summary of the payroll of Scotland Company, $450,000 was subject to the 7.0% social security tax and $500,000 was subject to the 1.5% Medicare tax. Federal income tax withheld was $98,000. Also, $15,000 was subject to state (4.2%) and federal (0.8%) unemployment taxes. The journal entry to record accrued salaries would include:

Interest expense is reported in the operating expense section of the income statement.

On June 8, Alton Co. issued an $90,000, 6%, 120-day note payable to Seller Co. Assuming a 360-day year for your calculations, what is the maturity value of the note?

Use the following information to answer the following questions. Assuming no employees are subject to ceilings for their earnings, Jensen Company has the following information for the pay period of January 15 - 31, 20xx. Salaries Payable would be recorded in the amount of:

The journal entry a company uses to record the issuance of an interest-bearing note for the purpose of borrowing funds for the business is

If, prior to the last weekly payroll period of the calendar year, the cumulative earnings for an employee are $98,800, earnings subject to social security tax are $100,000, and the tax rate is 6.0%, the employer's social security tax on the $2,000 gross earnings paid on the last day of the year is $120.