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Exam 11: Current Liabilities and Payroll Accounting

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Question 71

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A company sells computers with a 6-month warranty.In January,the company sold 100,000 computers at $1,750 each; and 1,500 computers were turned in for repairs during that same month.The total repairs amounted to $185,000 costs from the computer parts inventory.It is estimated that 2% of all units sold will need repairs under warranty at an estimated cost of $200 per unit.Prepare the journal entries to record (a)estimated warranty expense for January and (b)warranty repair costs for January.

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Question 72

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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.)

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Question 73

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

An employee earned $3,450 for the current period.Calculate the total and individual amounts to be withheld for social security (6.2%),Medicare (1.45%)and federal income tax (15%)assuming the entire employee's pay is subject to FICA taxes.

A company had income before interest expense and income taxes of $176,000,and its interest expense is $55,000.Calculate the company's times interest earned ratio.

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

A contingent liability:

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?

What is a short-term note payable? Explain the accounting issues related to notes payable.

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:

Trade accounts payable are amounts owed to suppliers for products or services purchased on credit.

Since income tax expense is created by earning income,a liability is incurred when income is earned.

Gross pay less all deductions is called ____________________.

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.

Employers can use a wage bracket withholding table to compute federal income taxes withheld from each employee's gross pay.

The current FUTA tax rate is 0.8%,and the SUTA tax rate is 5.4%.Both taxes are applied to the first $7,000 of an employee's pay.Assume that an employee earned $8,900.What is the amount of total unemployment taxes the employer must pay on this employee's wages?

A corporation has a $42,000 credit balance in the Income Tax Payable account.Period end information shows that the actual liability is $50,000.The company should record an entry to debit Income Tax Expense for $8,000 and credit Income Taxes Payable for $8,000.

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.

______________________ is the total compensation an employee earns including wages,salaries,commissions,bonuses,and any compensation earned before deductions such as taxes.

In the accounting records of a defendant,lawsuits: