Exam 11: Current Liabilities and Payroll

Most employers are required to withhold federal unemployment taxes from employee earnings.

Obligations that depend on past events and that are based on future possible events are contingent liabilities.

Employers are required to compute and report payroll taxes on a calendar-year basis, even if a different fiscal year is used for financial reporting and income tax purposes.

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:

Which statement below is not a determinate in calculating the amount of federal income taxes withheld from an individuals pay?

Another name for the quick ratio is

Which of the following taxes would be deducted in determining an employee's net pay?

The detailed record indicating the data for each employee for each payroll period and the cumulative total earnings for each employee is called the

Form W-2 is called the Wage and Tax Statement.

Ecco Company sold $150,000 of kitchen appliances during September under a 6 month warranty. The cost to repair defects under the warranty is estimated at 6% of the sales price. On October 15 a customer required a $200 part replacement, plus $85 labor under the warranty. Provide the journal entry for (a.) the estimated expense on September 30 and (b.) the October 15 warranty work.

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

A loan in which the lender deducts interest from the amount borrowed before the money is advanced to the borrower is called an interest bearing note.

The proceeds from discounting a $20,000, 60-day, note payable at 6% is $20,200.

Proper payroll accounting methods are important for a business for all the reasons below except

The following information is for employee Ella Dodd for the week ended March 15. Total hours worked: 48 Rate: $15 per hour, with double time for all hours in excess of 40 Federal income tax withheld: $200 United Fund deduction: $50 Cumulative earnings prior to current week: $6,400 Tax rates: Social security: 6% on maximum earnings of $100,000. Medicare tax: 1.5% on all earnings. State unemployment: 3.4% on maximum earnings of $7,000; on employer Federal unemployment: 0.8% on maximum earnings of $7,000; on employer

The journal entry to record the conversion of an $4,700 accounts payable to a notes payable would be:

Which of the following are included in the employer's payroll taxes?

Vacation pay payable is reported on the balance sheet as a(n)

For paying their payroll, most employers use payroll checks drawn on a special bank account.

On October 1, Ramos Co. signed a $90,000, 60-day discounted note at the bank. The discount rate was 6%, and the note was paid on November 30. (Assume a 360-day year is used for interest calculations.)