Question 1

A company's income before interest expense and taxes is $250,000 and its interest expense is $100,000. Its times interest earned ratio is .4.
$250,000/$100,000 = 2.5

Accepted Answer

A) True 
 B)False

Question 2

__________ allowances are items that reduce the amount of federal income taxes owed by the individual.

Accepted Answer

The answer of __________ allowances are items that reduce the...

Question 3

A liability does not exist if there is any uncertainty about whom to pay, when to pay, or how much to pay.

Accepted Answer

A) True 
 B)False

Question 4

Metro Express has 5 sales employees, each of whom earns $4,000 per month and is paid on the last working day of the month. Each employee's wages are subject to FICA social security taxes of 6.2% and Medicare taxes of 1.45% on all wages. Withholding for each employee also includes federal income tax of 16% and monthly medical insurance premiums of $110 for each employee.
a. Prepare the general journal entry to accrue the monthly sales salaries expense at January 31.
b. The employer payroll taxes for Metro Express include FICA taxes, federal unemployment taxes of 0.8% of the first $7,000 paid each employee, and state unemployment taxes of 4.0% of the first $7,000 paid to each employee. Prepare the journal entry to record the employer's payroll taxes at January 31 for Metro Express. (Assume that none of the employees has reached the unemployment limit of $7,000.)

Accepted Answer

The answer of Metro Express has 5 sales employees, each...

Question 5

Identify and explain the types of employer payroll taxes.

Accepted Answer

The answer of Identify and explain the types of employer...

Question 6

A payroll register includes:

Accepted Answer

A)  Pay period dates. 
B)  Hours worked. 
C)  Gross pay and net pay. 
D)  Deductions. 
E)  All of these.

Question 7

Identify and discuss the factors involved in computing federal income taxes for employees.

Accepted Answer

The answer of Identify and discuss the factors involved in...

Question 8

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 transaction by Alert Company?

Accepted Answer

A)  Debit Notes Payable $4,500; credit Accounts Payable $4,500. 
B)  Debit Accounts Payable $4,500; credit Notes Payable $4,500. 
C)  Debit Accounts Receivable $4,500; credit Notes Payable $4,500. 
D)  Debit Cash $4,500; credit Notes Payable $4,500. 
E)  Debit Sales $4,500; credit Notes Payable $4,500.

Question 9

The state unemployment tax rates applied to an employer are adjusted according to an employer's merit rating.

Accepted Answer

A) True 
 B)False

Question 10

All of the following statements related to current liabilities for U.S. GAAP and IFRS are True except:

Accepted Answer

A)  The definitions and characteristics of current liabilities are broadly similar for both U.S. GAAP and IFRS. 
B)  Provision is typically used under IRFS to refer to liability under U.S. GAAP. 
C)  Because tax regulatory systems of countries are different, the approach to recording taxes is totally different. 
D)  When there is little uncertainty surrounding current liabilities, both require companies to record them in a similar manner. 
E)  When there is a known current obligation that involves an uncertain amount, but one that can be reasonable estimated, both require similar treatment.

Question 11

A company's payroll for the week ended May 15 included earned salaries of $20,000. All of that week's pay is subject to FICA social security taxes of 6.2% and Medicare taxes of 1.45%. In addition, the company withholds the following amounts for this weekly pay period: $900 for medical insurance, $3,400 for federal income taxes, and $180 for union dues.
a. Prepare the general journal entry to accrue the payroll.
b. The company is subject to state unemployment taxes at the rate of 2% and federal unemployment taxes at the rate of 0.8%. By May 15, some employees had earned over $7,000, so only $9,000 of the $20,000 weekly gross pay was subject to unemployment tax. Prepare the general journal entry to accrue the employer's payroll tax expense.

Accepted Answer

The answer of A company's payroll for the week ended...

Question 12

On November 1, Bob's Skateboards signed a $12,000, 90-day, 5% note payable to cover a past due account payable.
a. What amount of interest expense on this note should Bob's Skateboards report on year-end December 31?
b. Prepare Bob's journal entry to record the issuance of the note payable.
c. Prepare Bob's journal entry to record the payment of the note on February 1 of the following year.

Accepted Answer

The answer of On November 1, Bob's Skateboards signed a...

Question 13

The Wage and Tax Statement is:

Accepted Answer

A)  Form 940. 
B)  Form 941. 
C)  Form 1040. 
D)  Form W-2. 
E)  Form W-4.

Question 14

On September 15, SportsWorld borrowed $75,000 cash from FirstBank by signing a 12%, 60-day note payable.
a. Prepare SportsWorld's journal entry to record the issuance of the note payable.
b. Prepare SportsWorld's journal entry to record the payment of the note at maturity.

Accepted Answer

The answer of On September 15, SportsWorld borrowed $75,000 cash...

Question 15

An employee earned $47,000 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 employee's annual FICA taxes amount is:

Accepted Answer

A)  $681.50. 
B)  $2,914.00. 
C)  $3,595.50. 
D)  $7,191.00. 
E)  Zero, since the employee's pay exceeds the FICA limit.

Question 16

Helix Co. entered into the following transactions involving short-term notes payable.
On May 14, Helix purchased $40,000 merchandise from Advent Co., terms are 2/15, n/30. Helix uses the perpetual inventory system.
On May 29, Helix replaced the May 14 account payable with a 60-day, $30,000 note bearing 8% annual along with paying $10,000 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.

Accepted Answer

The answer of Helix Co. entered into the following transactions...

Question 17

Phil Phoenix is paid monthly. For the month of January of the current year, he earned a total of $8,288. The FICA tax for social security is 6.2% and the FICA tax rate for Medicare is 1.45%. The 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. The amount of federal income tax withheld from his earnings was $1,375.17. His net pay for the month is:

Accepted Answer

A)  $5,190.83 
B)  $5,844.79 
C)  $6,278.79 
D)  $6,566.00 
E)  $6,792.64

Question 18

The difference between the amount received from issuing a note payable and the amount repaid is referred to as:

Accepted Answer

A)  Interest. 
B)  Principle. 
C)  Face Value. 
D)  Cash. 
E)  Accounts Payable.

Question 19

All of the following statements regarding long-term liabilities are True except?

Accepted Answer

A)  Liabilities not expected to be paid within the longer of one year or the company's operating cycle are reported as long-term liabilities. 
B)  Long-term liabilities include long-term notes payable, warranty liabilities, lease liabilities, and bonds payable. 
C)  Liabilities that do not have a fixed due date, but are payable on demand, are reported as long-term liabilities. 
D)  Long-term liabilities can be reported on the balance sheet in a single total or in multiple categories. 
E)  A single long-term liability can be divided between current and noncurrent sections on the balance sheet.

Question 20

To compute the amount of tax withheld from an employee's pay, employers can use a _______________________________________________________ table.

Accepted Answer

The answer of To compute the amount of tax withheld...

Exam 11: Current Liabilities and Payroll Accounting

A company's income before interest expense and taxes is $250,000 and its interest expense is $100,000. Its times interest earned ratio is .4. $250,000/$100,000 = 2.5

__________ allowances are items that reduce the amount of federal income taxes owed by the individual.

A liability does not exist if there is any uncertainty about whom to pay, when to pay, or how much to pay.

Identify and explain the types of employer payroll taxes.

A payroll register includes:

Identify and discuss the factors involved in computing federal income taxes for employees.

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 transaction by Alert Company?

The state unemployment tax rates applied to an employer are adjusted according to an employer's merit rating.

All of the following statements related to current liabilities for U.S. GAAP and IFRS are True except:

The Wage and Tax Statement is:

On September 15, SportsWorld borrowed $75,000 cash from FirstBank by signing a 12%, 60-day note payable. a. Prepare SportsWorld's journal entry to record the issuance of the note payable. b. Prepare SportsWorld's journal entry to record the payment of the note at maturity.

An employee earned $47,000 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 employee's annual FICA taxes amount is:

The difference between the amount received from issuing a note payable and the amount repaid is referred to as:

All of the following statements regarding long-term liabilities are True except?

To compute the amount of tax withheld from an employee's pay, employers can use a _______________________________________________________ table.