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Exam 11: Current Liabilities and Payroll Accounting

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Question 31

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A company borrowed $60,000 by signing a 60-day, 5% note payable from its bank. Compute the total cash payment due on the note's maturity date.

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At maturity: $60,000...

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Question 32

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On April 12, Hong Company agrees to accept a 60-day, 10%, $4,500 note from Indigo Company to extend the due date on an overdue account. -What is the journal entry needed to record the transaction by Indigo Company?

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

F) None of the above
G) A) and B)

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Question 33

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Unearned revenues are current liabilities.

An employee earns $5,500 per month working for an employer. The FICA tax rate for Social Security is 6.2% of the first $118,500 of earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. 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 the employer should record as payroll taxes expense for the employee for the month of January?

All of the following statements related to recording warranty expense are true except:

An employee earns $9,450 for the current period. The cumulative earnings of previous pay periods is $110,000. Social security tax applies to the first $118,500 of employee earnings. Calculate the total and individual amounts to be withheld for social security (6.2%), Medicare (1.45%) and federal income tax (15%).

An employee earnings report is a cumulative record of each employee's hours worked, gross earnings, deductions, and net pay.

SaveMart had income before interest expense and income taxes of $12,581 million and interest expense of $1,063 million. Valueland had income before interest expense and income taxes of $3,596 million and interest expense of $1,143 million. Calculate the times interest earned for each company and comment on the results.

A short-term note payable:

A single liability cannot be divided between current and noncurrent liabilities.

The Form W-2 must be given to employees before January 31 following the year covered by the Form W-2.

Companies with many employees often use a special ________ account to pay employees.

Classify each of the following items as either: A. Current liability B. Long-term liability C. Not a liability 1. 60-day promissory note 2. Payment of a 4-year term loan due this year 3. Salaries payable 4. Debt guarantees 5. FICA taxes payable 6. Income taxes payable 7. Payment of a 30-year term loan due this year 8. Payment of a 30-year term loan due next year. (The company's operating cycle is 2 months.) 9. Warranty work completed this year 10. Accounts payable

A company's has fixed interest expense of $52,000, income taxes expense of $121,000, and net income of $281,000. The company's times interest earned ratio equals:

On December 1, Watson Enterprises signed a $24,000, 60-day, 4% note payable as replacement of an account payable with Erikson Company. What amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)

Required payroll deductions include income taxes, Social Security taxes, pension and health contributions, union dues, and charitable giving.

Payments of FUTA are made quarterly to a federal depository bank if the total amount due exceeds $500.

Classify each of the following items as either:

Calculate the total amount of FICA withholding for an employee whose pay is $2,400 for the first pay period of the year. The tax rate for FICA-Social Security is 6.2% and the tax rate for FICA -Medicare is 1.45%.

The deferred income tax liability: