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.

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.

Assuming no employees are subject to ceilings for their earnings, Moore Company has the following information for the pay period of December 15 - 31, 20xx. Salaries Payable would be recorded for

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.

During the first year of operations, employees earned vacation pay of $35,000. The vacations will be taken during the second year. The vacation pay expense should be recorded in the second year as the vacations are taken by the employees.

Based on the following data, what is the acid-test ratio, rounded to one decimal point?

Journalize the following entries on the books of the borrower and creditor. Label accordingly. (Assume a 360-day year is used for interest calculations.)

Journalize the following entries on the books of Winston Co. for August 1, September 1, and November 30. (Assume a 360-day year is used for interest calculations.)

Which of the following is the most desirable quick ratio?

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

The following totals for the month of June were taken from the payroll register of Arcon Company: The entry to record the payment of net pay would include a

On October 30, Seba Salon, Inc. issued a 90-day note with a face amount of $60,000 to Reyes Products, Inc. for merchandise inventory. Determine the proceeds of the note assuming the note is discounted at 8%.

The use of a separate payroll bank account is not an advantageous control, because it creates more complexity in reconciliation functions for a company and invites theft.

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.)

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

Assuming a 360-day year, proceeds of $48,750 were received from discounting a $50,000, 90-day note at a bank. The discount rate used by the bank in computing the proceeds was

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.

Payroll taxes are based on the employee's net pay.

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

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 entry to record accrual of employer's payroll taxes would include a