Exam 11: Current Liabilities and Payroll

Florida Keys Construction installs swimming pools. They calculate that warranty obligations are 3% of gross sales. For the year just ending Florida Keys' gross sales were $1,450,000. Due to previous quarter recognitions, the Warranty Liability account has a credit balance of $28,700. Determine the year's total warranty liability and journalize any necessary value to establish the year's liability at December 31st. Due to sales, $1,450,000, warranty liability is $43,500 ($1,450,000 × 3%). Since $28,700 has already been recognized, $14,800 (or $43,500 - $28,700) must still be recognized.

On June 8, Alton Co. issued an $95,000, 6%, 120-day note payable to Seller Co. What is the due date of the note?

On June 8, Alton Co. issued an $80,000, 6%, 120-day note payable to Seller Co. Assume that the fiscal year of Seller Co. ends June 30. Using the 360-day year in your calculations, what is the amount of interest revenue recognized by Seller in the following year?

Federal unemployment taxes are paid by the employer and the employee.

The following totals for the month of April were taken from the payroll register of Magnum Company. The entry to record accrual of employer's payroll taxes would include a

During the first year of operations, a company granted warranties on its products. The estimated cost of the product warranty liability at the end of the year is $8,500. The product warranty expense of $8,500 should be recorded in the years of the expenditures to repair the products covered by the warranty payments.

Which of the following is the most desirable quick ratio?

John Woods' weekly gross earnings for the present week were $2,500. Woods has two exemptions. Using $80 value for each exemption, what is Woods' federal income tax withholding?

Depending upon when an unfunded pension liability is to be paid, it will be classified on the balance sheet as either a long-term or a current liability.

Power Company sells merchandise with a one year warranty. In 2012, sales consisted of 1,600 units. It is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in 2012 and 70% in 2013. In the 2012 income statement, Power should show warranty expense of

Most employers are required to withhold from employees which of the following employment taxes?

Assuming a 360-day year, the interest charged by the bank, at the rate of 9%, on a 90-day, discounted note payable of $100,000 is

Receiving payment prior to delivering goods or services causes a current liability to be incurred.

The total net pay for a period is determined from the payroll register.

Medicare taxes are paid by both the employee and the employer.

The journal entry a company uses to record partially funded pension rights for its salaried employees, at the end of the year is

A current liability is a debt that is reasonably expected to be paid

Which of the following is the most desirable quick ratio?

The total earnings of an employee for a payroll period is referred to as

An employee's take home pay is equal to gross pay less all voluntary deductions.