Exam 10: Current Liabilities and Payroll

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.

The payroll summary for December 31 for Waters Co. revealed total earnings of $80,000. Earnings subject to 6% social security tax were $50,000; earnings subject to 1.5% Medicare tax were $80,000; and earnings of $3,000 were subject to 4.3% state and 0.8% federal unemployment compensation tax. Journalize the entry to record the accrual of payroll taxes.

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

The current portion of long-term debt should

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

Use the following information to answer the following questions. The following totals for the month of April were taken from the payroll register of Magnum Company. The journal entry to record the monthly payroll on April 30 would include a

Taxes deducted from an employee's earnings to finance social security and Medicare benefits are called FICA taxes.

Payroll taxes levied against employees become liabilities

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

Assume that social security taxes are payable at a 6% rate on the first $100,000 of earnings and Medicare taxes are payable at a 1.5% rate with no maximum earnings, and that federal and state unemployment compensation taxes total 4.6% on the first $7,000 of earnings. If an employee, George Jones, earns $2,500 for the current week and Jones' year-to-date earnings before this week were $6,800, what is the total payroll taxes related to the current week?

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 journal entry a company uses to record the estimated accrued product warranty liability is

Federal unemployment compensation taxes that are collected by the federal government are paid directly to the unemployed but are allocated among the states for use in state programs.

During September, Excom sold 100 radios for $50 each. Each radio cost Excom $30 to purchase, and carried a two-year warranty. If 5% typically need to be replaced over the warranty period and one is actually replaced during September, for what amount in September would Excom debit Product Warranty Expense?

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

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

Notes may be issued

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.

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

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