Exam 10: Current Liabilities and Payroll

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.

The journal entry to record the cost of warranty repairs that were incurred during the current period,but related to sales made in prior years,includes a debit to Warranty Expense.

An employee receives an hourly rate of $15,with time and a half for all hours worked in excess of 40 during the week.Payroll data for the current week are as follows: hours worked,46;federal income tax withheld,$110;cumulative earnings for the year prior to this week,$24,500;Social security tax rate,6% on maximum of $100,000;and Medicare tax rate,1.5% on all earnings;state unemployment compensation tax,3.4% on the first $7,000;federal unemployment compensation tax,.8% on the first $7,000.What is the net amount to be paid to the employee?

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

Federal unemployment compensation taxes that are not collected by the federal government are paid directly to the unemployed but are allocated among the states for use in state programs.

In a defined benefits plan,the employer bears the investment risks in funding a future retirement income benefit.

Martin Services Company provides their employees vacation benefits and a defined contribution pension plan.Employees earned vacation pay of $39,500 for the period.The pension plan requires a contribution to the plan administrator equal to 9% of employee salaries.Salaries were $750,000 during the period.Provide the journal entry for (a. )the vacation pay and (b. )the pension benefit.

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

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

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

Generally,all deductions made from an employee's gross pay are required by law.

An employee receives an hourly rate of $15,with time and a half for all hours worked in excess of 40 during the week.Payroll data for the current week are as follows: hours worked,46;federal income tax withheld,$120;cumulative earnings for the year prior to this week,$5,500;Social security tax rate,6% on maximum of $100,000;and Medicare tax rate,1.5% on all earnings;state unemployment compensation tax,3.4% on the first $7,000;federal unemployment compensation tax,.8% on the first $7,000.Prepare the journal entries to record the salaries expense and the employer payroll tax expense.

Form W-4 is a form authorizing employers to withhold a portion of employee earnings for payment of an employee's federal income taxes.

All long-term liabilities eventually become current liabilities.

A pension plan which promises employees a fixed annual pension benefit,based on years of service and compensation,is called a(n)

The discount on a note payable is charged to an account that has a normal credit balance.

Which of the following is required to be withheld from employee's gross pay?

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. )

The journal entry a company uses to record accrued vacation privileges for its employees at the end of the year is

Which of the following forms is typically given to employees at the end of the calendar year so that employees can file their individual income tax forms?