Vanity Dog Products had the following account balances. \(\begin{array}{c} \begin{array}{|lr|} \hline 2014\\ \hline \$ & 89,000 \\ \hline \$ & 98,000 \\ \hline \$ & 99,500 \\ \hline \$ & 25,000 \\ \hline \$ & 155,000 \\ \hline \$ & 199,500 \\ \hline \$ & 45,000 \\ \hline \$ & 55,000 \\ \hline \$ & 145,000 \\ \hline \$ & 1,000,000 \\ \hline \$ & 297,500 \\ \hline \end{array} \begin{array}{lr|} \hline 2013 & \\ \hline \$ & 76,000 \\ \hline \$ & 135,000 \\ \hline \$ & 67,800 \\ \hline \$ & 45,000 \\ \hline \$ & 145,000 \\ \hline \$ & 145,600 \\ \hline \$ & 25,000 \\ \hline \$ & 100,000 \\ \hline \$ & 145,000 \\ \hline \$ & 1,000,000 \\ \hline \$ & 265,000 \\ \hline \end{array} \begin{array}{l|} \hline \text {}\\ \hline \text {Cash}\\ \hline \text {Marketable Securities}\\ \hline \text {Account Receivables}\\ \hline \text {Inventory}\\ \hline \text {Plant Assets}\\ \hline \text {Accounts Payable}\\ \hline \text {Notes Payable, Short Term}\\ \hline \text {Notes Payable, Long Term}\\ \hline \text {Mortgage Payable}\\ \hline \text {Common Stock}\\ \hline \text {Retained Earmings}\\ \hline \end{array} \end{array}\) Required: Compute the following : 1) The 2013 Quick Ratio 2) The 2013 Current Ratio 3) The 2014 Quick Ratio 4) The 2014 Current Ratio 5) What was net income for 2014, assuming no dividends were paid? 6) Did the quick ratio improve for 2014 over 2013 or did it degrade?

@#IMG-DLM& 6) Both the current and quick

Exam 9: Current Liabilities and Contingencies

Short term debt that is expected to be refinanced on a long term basis may be excluded from the current liability classification if the company has the intent to refinance or the ability to refinance.

(True/False)

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Question 61

Munster sells a product with a four-year warranty. Warranty costs are estimated as a percentage of sales as follows: 1/1\% Year after sale 1\% Two years after sale 1\% Three years after sale Additional data: Warranty \ 600 \ 50,000 2013 800 60,000 2014 900 40,000 2015 2,500 70,000 2016 Required: a.If the modified cash method is in use, what would be warranty expense for 2015? b.If the expense warranty accrual method is in use, what would be warranty expense for 2015? c.If the expense warranty accrual method is in use, what amount of liability for warranties would be disclosed on the balance sheet on December 31, 2016?

(Essay)

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Question 62

On January 1, 2014, the Pruett Company signed a six-month, non-interest-bearing note payable for $170,000 and received $162,800 from Your Neighborhood Bank. On January 31, 2014, what amount should Pruett record for interest expense, and what is the net carrying value of the note?

(Multiple Choice)

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Question 63

Which of the following statements concerning contingencies is true?

(Multiple Choice)

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Question 64

Unearned or deferred revenue can occur when

(Multiple Choice)

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Question 65

Management of current liabilities arises, in part, because of a concern over

(Multiple Choice)

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Question 66

On July 1, 2014 Trolley & Train World borrowed money from their bank First Friendly National Bank by issuing a $25,000, 90 day, non interest bearing note. The note was discounted to 14%. Compute the following: 1) How much money did Trolley and Train World receive? 2) What was the total amount of interest paid? 3) What is the effective 90 day interest rate on this note (round to 4 decimals)? 4) What is the approximate annual effective interest rate on this note payable?

(Essay)

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Question 67

The sales manager of the Walbrook Company receives an annual bonus of 10% of net income after bonus and taxes. In 2014, Walbrook's income, before bonus and taxes, was $400,000. The effective tax rate is 30%. Required: a. Compute the salesmanager's bonus and the income tax expense for the Walbrook Company. b. Why does Walbrook compute the sales mangger bonus after taxes and the bonus?

(Essay)

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Question 68

FASB is concerned with the accurate portrayal of liquidity because users evaluate future cash flows in their decision making practices.

(True/False)

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Question 69

All of the following payroll taxes are levied against the employer except

(Multiple Choice)

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Question 70

Vanity Dog Products had the following account balances. 2014 \ 89,000 \ 98,000 \ 99,500 \ 25,000 \ 155,000 \ 199,500 \ 45,000 \ 55,000 \ 145,000 \ 1,000,000 \ 297,500 2013 \ 76,000 \ 135,000 \ 67,800 \ 45,000 \ 145,000 \ 145,600 \ 25,000 \ 100,000 \ 145,000 \ 1,000,000 \ 265,000 Cash Marketable Securities Account Receivables Inventory Plant Assets Accounts Payable Notes Payable, Short Term Notes Payable, Long Term Mortgage Payable Common Stock Retained Earmings Required: Compute the following : 1) The 2013 Quick Ratio 2) The 2013 Current Ratio 3) The 2014 Quick Ratio 4) The 2014 Current Ratio 5) What was net income for 2014, assuming no dividends were paid? 6) Did the quick ratio improve for 2014 over 2013 or did it degrade?

(Essay)

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Question 71

Marble Co. employs a staff of 35 at a total monthly gross pay of $75,000. The company withholds federal income tax at 20% and state income tax at 3% for all employees. In addition, the following tax rates apply: FICA tax, 7.65%; federal unemployment tax, 0.8%; state unemployment tax, 2.7%. Required: a. Prepare the journal entry to record salaries and employee withholding items for the month of January. Round number up b. Prepare the journal entry to record employer payroll taxes for the month of January.

(Essay)

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Question 72

On December 1, 2014, Old Car Co. borrowed money at the bank by signing a 90-day non-interest-bearing note for $24,000 that was discounted at 8%. Which of the following entries is correct?

(Multiple Choice)

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Question 73

Which of the following is NOT a characteristic of a liability?

(Multiple Choice)

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Question 74

The modified cash basis to determine warranty expense

(Multiple Choice)

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Question 75

According to current GAAP, which of the following is not a condition suggesting that an accrual for vacation pay be made?

(Multiple Choice)

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Question 76

Which of the following would not be an acceptable method of presenting current liabilities on the balance sheet?

(Multiple Choice)

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Question 77

Voluntary payroll deductions may include all of the following except

(Multiple Choice)

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Question 78

Feller, Inc. sells a certain machine for $35,000. Included in this price is an implied service contract of $950. Fifty machines were sold in 2014. Warranty claims incurred during 2014 amounted to $21,000. The company uses the sales warranty accrual method. Required: Prepare all 2014 journal entries required by the information above.

(Essay)

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Question 79

Which of the following statements regarding the gross and net methods for recording trade accounts payable is true?

(Multiple Choice)

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Question 80

Short term debt that is expected to be refinanced on a long term basis may be excluded from the current liability classification if the company has the intent to refinance or the ability to refinance.

On January 1, 2014, the Pruett Company signed a six-month, non-interest-bearing note payable for $170,000 and received $162,800 from Your Neighborhood Bank. On January 31, 2014, what amount should Pruett record for interest expense, and what is the net carrying value of the note?

Which of the following statements concerning contingencies is true?

Unearned or deferred revenue can occur when

Management of current liabilities arises, in part, because of a concern over

FASB is concerned with the accurate portrayal of liquidity because users evaluate future cash flows in their decision making practices.

All of the following payroll taxes are levied against the employer except

On December 1, 2014, Old Car Co. borrowed money at the bank by signing a 90-day non-interest-bearing note for $24,000 that was discounted at 8%. Which of the following entries is correct?

Which of the following is NOT a characteristic of a liability?

The modified cash basis to determine warranty expense

According to current GAAP, which of the following is not a condition suggesting that an accrual for vacation pay be made?

Which of the following would not be an acceptable method of presenting current liabilities on the balance sheet?

Voluntary payroll deductions may include all of the following except

Which of the following statements regarding the gross and net methods for recording trade accounts payable is true?

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Notes Payable

Contributed Capital

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Postretirement Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

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