Exam 11: Current Liabilities and Payroll Accounting

An employee earned $4,300 working for an employer. The current rate for FICA Social Security is 6.2% and the rate for FICA Medicare 1.45%. The employer's total FICA payroll tax for this employee is:

An employee earns $5,500 per month working for an employer. The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The current FUTA tax rate is 0.8%, and the SUTA tax rate is 4.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The employee has $182 in federal income taxes withheld. The employee has voluntary deductions for health insurance of $150 and contributes $75 to a retirement plan each month. What is the amount of net pay for the employee for the month of January?

On March 17, Grady Company agrees to accept a 60-day, 10%, $4,500 note from Alert Company to extend the due date on an overdue account. What is the journal entry needed to record the payment of the note by Alert Company on the maturity date?

Unearned revenues are liabilities.

Arena Company's salaried employees earn two weeks vacation per year. It pays $858,000 in total employee salaries for 52 weeks but its employees work only 50. Record Arena Company's weekly journal entry to record the vacation expense:

What are estimated liabilities? Cite at least two examples and explain why they are classified as estimated liabilities.

During August, Arena Company sells $356,000 in product that has a one year warranty. Experience shows that warranty expenses average about 5% of the selling price. The warranty liability account has a balance of $12,800 before adjustment. Customers returned product for warranty repairs during the month that used $9,400 in parts for repairs. The entry to record the customer warranty repairs is:

Obligations due to be paid within one year or the company's operating cycle, whichever is longer, are:

An employee earned $62,500 during the year working for an employer. The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The current FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. What is the amount of total unemployment taxes the employee must pay?

Describe how to account for and report on contingent liabilities.

Arena Sports receives $31,680,000 cash in advance ticket sales for 11 home games. Record the advance ticket sales on March 31. Record the revenue earned for the first home game played on August 17.

Unearned revenues are amounts received _______________ for future products or services.

On January 31, Hale Company's payroll register showed that its employers earned $30,320 of office salaries and $82,750 of sales salaries. Withholdings from the employees' salaries include FICA Social Security taxes as the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, $16,960 of federal income taxes, $2,350 of medical insurance deductions (which represents 50% of the total cost of the employee medical insurance), and $4,210 of 401(k) retirement contribution deductions. Hale Company pays the other 50% of the employee insurance cost and matches the employee 401(k) contributions. Several employees earned more than $7,000 for the period which reduced salaries subject to unemployment to $110,000. No employees exceeded the FICA-Social Security taxable wage base. 1. Prepare the journal entry to record Hale Company's January 31 payroll expenses and liabilities. 2. Prepare the journal entry to record Hale Company's employer payroll taxes resulting from the January 31 payroll. Hale's merit rating reduces its state unemployment to 4% of the first $7,000 paid each employee. The federal unemployment tax rate is .8%. 3. Prepare the journal entry to record Hale's additional employee expenses.

A payroll register usually shows the pay period dates, hours worked, gross pay, deductions, and net pay of each employee for every pay period.

Ember Co. entered into the following transactions involving short-term notes payable. On June 18, Ember purchased $25,000 merchandise from Halco Co., terms are 2/10, n/30. Halco uses the perpetual inventory system. On July 19, Ember replaced the June 18 account payable with a 60-day, $22,000 note bearing 9% annual in addition to paying $3,000 in cash. ________ Paid the amount due on the note at maturity. 1. Determine the maturity date for the note. 2. Prepare journal entries for all the preceding transactions and events.

A lawsuit is an example of a contingent liability for the defendant.

Blake Company pays its employees for two weeks vacation each year. The total annual cost of the vacation benefit is $113,000. Prepare the journal entry to record the weekly accrued vacation expense.

Estimated liabilities commonly arise from:

____________________________ are banks authorized to accept deposits of amounts payable to the federal government, including amounts due for payroll taxes.

The unemployment insurance program: