Exam 10: Current Liabilities and Payroll

If, prior to the last weekly payroll period of the calendar year, the cumulative earnings for an employee are $98,800, earnings subject to social security tax are $100,000, and the tax rate is 6.0%, the employer's social security tax on the $2,000 gross earnings paid on the last day of the year is $120.

The proceeds of a discounted note are equal to the face value of the note.

Grayson Bank agrees to lend the Trust Company $100,000 on January 1. Trust Company signs a $100,000, 8%, 9-month note. The entry made by Trust Company on January 1 to record the proceeds and issuance of the note is:

Notes payable may be issued to creditors to satisfy accounts payable created earlier.

Employers are required to compute and report payroll taxes on a calendar-year basis, even if a different fiscal year is used for financial reporting and income tax purposes.

The payroll register of Seaside Architecture Company indicates $970 of Social Security and $257 of Medicare tax withheld on total salaries of $16,500 for the period. Federal withholding for the period totaled $3,245. Provide the journal entry for the period's payroll.

The borrower is the one who issues a note payable to a creditor.

On June 8, Alton Co. issued an $90,000, 6%, 120-day note payable to Seller Co. Assuming a 360-day year for your calculations, what is the maturity value of the note?

FICA tax is a payroll tax that is paid only by employers.

On January 5, 2012, Garrett Company, a calendar-year company, issued $500,000 of notes payable, of which $100,000 is due on January 1 for each of the next five years. The proper balance sheet presentation on December 31, 2012, is

Journalize the following transactions:

All long-term liabilities eventually become current liabilities.