Question 1

The summary of the payroll for the monthly pay period ending July 15 indicated the following:? $\begin{array}{lr}
\text { Sales salaries } & \$ 125,000 \
\text { Federal income tax withheld } & 32,300 \
\text { Office salaries } & 35,000 \
\text { Medical insurance withheld } & 7,370 \
\text { Social security tax withheld } & 10,200 \
\text { Medicare tax withheld } & 2,550
\end{array}$ Journalize the entries to record 
(a) the payroll and 
(b) the employer's payroll tax expense for the month. The state unemployment tax rate is 3.1%, and the federal unemployment tax rate is 0.8%. Only $25,000 of salaries are subject to unemployment taxes.

Accepted Answer

The answer of The summary of the payroll for the...

Question 2

Roseland Design borrowed $700,000 on a 90-day note from CorpOne Funding Company. CorpOne discounts the note at 8%. (Assume a 360-day year is used for interest calculations.)

(a) 	Journalize Roseland’s entries to record:
     a.	The issuance of the note.
     b.	The payment of the note at maturity.
 	 
(b) 	Journalize CorpOne’s entries to record:
     a.	The receipt of the note.
     b.	The receipt of the payment of the note at maturity.

Accepted Answer

The answer of Roseland Design borrowed $700,000 on a 90-day...

Question 3

Notes may be issued

Accepted Answer

A)  when assets are purchased 
B)  to creditors to temporarily satisfy an account payable created earlier 
C)  when borrowing money 
D)  All of these choices

Question 4

On January 5, Thomas Company, which follows a calendar year, issued $1,000,000 of notes payable, of which $250,000 is due on January 1 each of the next four years. The proper balance sheet presentation on December 31 is

Accepted Answer

A)  Current liabilities, $1,000,000 
B)  Current liabilities, $250,000; Long-term debt, $750,000 
C)  Long-term debt, $1,000,000 
D)  Current liabilities, $750,000; Long-term debt, $250,000

Question 5

An unfunded pension liability is reported on the balance sheet as

Accepted Answer

A)  a current liability 
B)  owner's equity 
C)  a long-term liability 
D)  a current liability or long-term liability, depending on when the pension liability is to be paid

Question 6

Hall Company sells merchandise with a one-year warranty. In the current year, sales consist of 4,500 units. It is estimated that warranty repairs will average $10 per unit sold and 30% of the repairs will be made in the current year and 70% in the next year. In the current year's income statement, Hall should show warranty expense of

Accepted Answer

A)  $45,000 
B)  $13,500 
C)  $31,500 
D)  $0

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Use this information for Harris Company to answer the following questions.
​
Assuming no employees are subject to ceilings for their earnings, Harris Company has the following information for the pay period of January 15-31.
​
 $$\begin{array} { l r l c } 
\text { Gross payroll } & \$ 10,000 & \text { Federal income tax withheld } & \$ 1,800 \
\text { Social security rate } & 6.0 \% & \text { Federal unemployment tax rate } & 0.8 \% \
\text { Medicare rate } & 1.5 \% & \text { State unemployment tax rate } & 5.4 \%
\end{array}$$ ​
-Salaries Payable would be recorded for

Accepted Answer

A)  $8,200 
B)  $6,830 
C)  $8,630 
D)  $7,450

Question 9

A borrower has two alternatives for a loan: 
(1) 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.)
(a)Calculate the amount of the interest expense for each option.
(b)Determine the proceeds received by the borrower in each situation.

Accepted Answer

The answer of A borrower has two alternatives for a...

Question 10

Depending on 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.

Accepted Answer

A) True 
 B)False

Question 11

The journal entry to record the payment of an interest-bearing note is

Accepted Answer

A)  debit Cash; credit Notes Payable 
B)  debit Accounts Payable; credit Cash 
C)  debit Notes Payable and Interest Expense; credit Cash 
D)  debit Notes Payable and Interest Receivable; credit Cash

Question 12

Martin Jackson receives an hourly wage rate of $30, with time-and-a-half pay for all hours worked in excess of 40 hours during a week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $350; social security tax rate, 6.0%; and Medicare tax rate, 1.5%. What is the net amount to be paid to Jackson?

Accepted Answer

A)  $1,470.00 
B)  $1,009.75 
C)  $1,097.95 
D)  $460.25

Question 13

The total net pay for a period is determined from the payroll register.

Accepted Answer

A) True 
 B)False

Question 14

Match each payroll item that follows to the one item (a-f) that best describes its characteristics.
-Federal income tax

Accepted Answer

A) Amount is limited, withheld from employee only 
B) Amount is limited, withheld from employee and matched by employer 
C) Amount is limited, paid by employer only 
D) Amount is not limited, withheld from employee only 
E) Amount is not limited, withheld from employee and matched by employer
F)Amount is not limited, paid by employer only

Question 15

Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once.
-Current assets/Current liabilities

Accepted Answer

A) Current ratio 
B) Working capital 
C) Quick assets 
D) Quick ratio 
E) Record an accrual and disclose in the notes to the financial statements
F)Disclose only in notes to financial statements
G)No disclosure needed in notes to financial statements

Question 16

According to a summary of the payroll of Scotland Company, $450,000 was subject to the 6.0% social security tax and $500,000 was subject to the 1.5% Medicare tax. Federal income tax withheld was $98,000. Also, $15,000 was subject to state (4.2%) and federal
(0)8%) unemployment taxes. The journal entry to record the accrued payroll taxes would include a​

Accepted Answer

A)  debit to SUTA Payable for $630 
B)  debit to SUTA Payable for $18,900 
C)  credit to SUTA Payable for $630 
D)  credit to SUTA Payable for $18,900

Question 17

Journalize the following, assuming a 360-day year is used for interest calculations:?
Apr. 30 Issued a $150,000, 30-day, 6% note dated April 30 to Misner Co. on account.
May 30 Paid Misner Co. the amount owed on the note dated April 30.

Accepted Answer

The answer of Journalize the following, assuming a 360-day year...

Question 18

Match each payroll item that follows to the one item (a-f) that best describes its characteristics.
-FICA-Social security

Accepted Answer

A) Amount is limited, withheld from employee only 
B) Amount is limited, withheld from employee and matched by employer 
C) Amount is limited, paid by employer only 
D) Amount is not limited, withheld from employee only 
E) Amount is not limited, withheld from employee and matched by employer
F)Amount is not limited, paid by employer only

Question 19

Dixon Sales has seven sales employees that receive weekly paychecks. Each earns $10.25 per hour and each has worked 40 hours in the pay period. Each employee pays 12% of gross in federal income tax, 3% in state income tax, 6.0% of gross in social security tax, 1.5% of gross in Medicare tax, and 0.5% in state disability insurance. Journalize the recognition of the pay period ending January 19 that will be paid to the employees January 26.

Accepted Answer

The answer of Dixon Sales has seven sales employees that...

Question 20

For proper matching of revenues and expenses, the estimated cost of fringe benefits must be recognized as an expense of the period during which the employee earns the benefits.

Accepted Answer

A) True 
 B)False

Exam 11: Current Liabilities and Payroll

Notes may be issued

On January 5, Thomas Company, which follows a calendar year, issued $1,000,000 of notes payable, of which $250,000 is due on January 1 each of the next four years. The proper balance sheet presentation on December 31 is

An unfunded pension liability is reported on the balance sheet as

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

Depending on 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.

The journal entry to record the payment of an interest-bearing note is

The total net pay for a period is determined from the payroll register.

Match each payroll item that follows to the one item (a-f) that best describes its characteristics. -Federal income tax

Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once. -Current assets/Current liabilities

Journalize the following, assuming a 360-day year is used for interest calculations:? Apr. 30 Issued a $150,000, 30-day, 6% note dated April 30 to Misner Co. on account. May 30 Paid Misner Co. the amount owed on the note dated April 30.

Match each payroll item that follows to the one item (a-f) that best describes its characteristics. -FICA-Social security

For proper matching of revenues and expenses, the estimated cost of fringe benefits must be recognized as an expense of the period during which the employee earns the benefits.