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Exam 8: Liabilities and Stockholders Equity

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Question 51

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Most employers are required to withhold federal unemployment taxes from employee earnings.

A) True
B) False

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Question 52

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Which statement below is NOT a reason for a corporation to buy back its own stock?

A) Resale to employees
B) Bonus to employees
C) For supporting the market price of the stock
D) To increase the shares outstanding

E) A) and C)
F) None of the above

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Question 53

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An employee receives an hourly rate of $27,with time and a half for all hours worked In excess of 40 during a week.Payroll data for the current week are as follows: hours worked,46;federal income tax withheld,$350;cumulative earnings for year prior to current week,$99,700;social security tax rate,6.0% on maximum of $106,800;and Medicare tax rate,1.5% on all earnings.What is the gross pay for the employee?

The following information is for employee William Heedy for the week ended March 15. Total hours worked: 48 Rate: $16 per hour,with double time for all hours in excess of 40 Federal income tax withheld: $200 United Fund deduction: $50 Cumulative earnings prior to current week: $6,400 Tax rates: Social security: 6% on maximum earnings of $106,800 Medicare tax: 1.5% on all earnings;on both employer and employee State unemployment: 3.4% on maximum earnings of $7,000;on employer Federal unemployment: 0.8% on maximum earnings of $7,000;on employer

How is treasury stock shown on the balance sheet?

During the first year of operations,a company granted warranties on its products.The estimated cost of the product warranty liability at the end of the year is $12,750.The product warranty expense of $12,750 should be recorded in the year the related product sale is made.

The liability for a dividend is recorded on which of the following dates?

If 20,000 shares are authorized,15,000 shares are issued,and 500 shares are reacquired,the number of outstanding shares is 19,500.

If 50,000 shares are authorized,35,000 shares are issued,and 1,000 shares are reacquired,the number of outstanding shares is 36,000.

The primary purpose of a stock split is to reduce the number of shares outstanding in order to encourage more investors to enter the market for the company's shares.

Significant changes in stockholders' equity are reported in the

Most employers are required to withhold from employees for

The par value per share of common stock represents

If the market rate of interest is 8% and a corporation's bonds bear interest at 7%,the bonds will sell at a premium.

One of the prerequisites required to pay a cash dividend is formal action by the board of directors.

The summary of the payroll for the monthly pay period ending July 15 indicated the following: Illustrate the effects on the accounts and the financial statements of (a)the payroll and (b)the employer's payroll tax expense for the month.The state unemployment tax rate is 5.4%,and the federal unemployment tax rate is 0.8%.Only $30,000 of salaries are subject to unemployment taxes.

The main source of paid-in-capital is from issuing stock.

Which of the following is characteristic of deferred income tax payable?

When a corporation issues bonds,it executes a contract with the bondholders known as a bond debenture.

The par value of common stock is rarely equal to its market value on the date the stock is issued.