Question 1

Athena Company provides employee health insurance that costs $5,000 per month.In addition,the company contributes an amount equal to 5% of the employees' $120,000 gross salary to a retirement program.The entry to record the accrued benefits for the month would include a:

Accepted Answer

A)   Debit to Medical Insurance Payable $5,000.
B)   Debit to Employee Retirement Program Payable $6,000.
C)   Debit to Employee Benefits Expense $11,000.
D)   Credit to Employee Benefits Expense $11,000.
E)   Debit to Payroll Taxes Expense $11,000.F) A) and B)
G) B) and E)

Question 2

On December 1,Watson Enterprises signed a $24,000,60-day,4% note payable as replacement of an account payable with Erikson Company.What is the journal entry that should be recorded upon signing the note?

Accepted Answer

A)   Debit Accounts Receivable $24,000; credit Notes Receivable $24,000.
B)   Debit Accounts Payable $24,000; credit Notes Payable $24,000.
C)   Debit Accounts Payable $24,160; credit Notes Payable $24,160.
D)   Debit Notes Payable $24,000; debit Interest Expense $160; credit Accounts Payable $24,160.
E)   Debit Notes Payable $24,000; debit Interest Expense $160; credit Cash $24,160.F) A) and B)
G) B) and E)

Question 3

Match the following items with the appropriate designation (Estimated liability, Contingent liability, or Known liability) .
-Accrued wages payable

Accepted Answer

A)  Contingent liability
B)  Estimated liability
C)  Known liabilityD) None of the above
E) A) and C)

Question 4

Employee vacation benefits:

Accepted Answer

A)   Are estimated liabilities.
B)   Are contingent liabilities.
C)   Are recorded as an expense when the employee takes a vacation.
D)   Are recorded as an expense when the employee retires.
E)   Increase net income.F) A) and E)
G) None of the above

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Match the following items with the appropriate designation (Current liability, Long-term liability, or Not a liability) .
-Payment of a 30-year term loan due this year

Accepted Answer

A)  Long-term liability
B)  Not a liability
C)  Current liabilityD) B) and C)
E) A) and C)

Question 7

During the first week of January,an employee works 46 hours.For this company,workers earn 150% of their regular rate for hours in excess of 40 per week.Her pay rate is $16 per hour,and her wages are subject to no deductions other than FICA Social Security,FICA Medicare,and federal income taxes.The tax rate for Social Security is 6.2% of the first $118,500 earned 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 $80 in federal income taxes withheld.
-What is the amount of this employee's gross pay for the first week of January?

Accepted Answer

A)   $736
B)   $784
C)   $1,104
D)   $1,156
E)   $1,004F) C) and D)
G) A) and D)

Question 8

On September 15,SkateWorld borrowed $70,000 cash from Mutual Bank by signing a 6%,60-day note payable.
a.Prepare SkateWorld's journal entry to record the issuance of the note payable.
b.Prepare SkaetWorld's journal entry to record the payment of the note at maturity.

Accepted Answer

a. \[\begin{array} { l l l }
9 / 15 &\te ...

Question 9

Companies may use a special bank account solely for the purpose of paying employees,by depositing an amount equal to the total employees' net pay into the account each pay period and drawing the employees' payroll checks on the account.This account is a(n) :

Accepted Answer

A)   Federal depository bank account.
B)   Employee's Individual Earnings account.
C)   Employees' bank account.
D)   Payroll register account.
E)   Payroll bank account.F) All of the above
G) C) and E)

Question 10

A company's payroll information for the month of May follows:
 $$\begin{array} { l l } 
\text { Administrative salaries } & \$ 4,000 \
\text { Sales salaries } & 5,500 \
\text { FICA-Social Security taxes withheld } & 589 \
\text { FICA-Medicare taxes withheld } & 138 \
\text { Federal income taxes withheld } & 1,300 \
\text { Medical insurance premiums withheld } & 415 \
\text { Union dues withheld } & 205
\end{array}$$ 
On May 31 the company issued Check No.4625 payable to the Payroll Bank Account to pay for the May payroll.It issued payroll checks to the employees after depositing the check.(1)Prepare the journal entry to record (accrue)the employer's payroll for May.(2)Prepare the journal entry to record payment of the May payroll.The federal and state unemployment tax rates are 0.6% and 5.4%,respectively,on the first $7,000 paid to each employee.The wages and salaries subject to these taxes were $6,000.(3)Prepare the journal entry to record the employer's payroll taxes.

Accepted Answer

\[\begin{array} { l l }
\text { May } 3...

Question 11

A corporation has a $40,000 credit balance in the Income Tax Payable account.Period end information shows that the actual liability is $47,000.The company should record an entry to debit Income Tax Expense for $7,000 and credit Income Taxes Payable for $7,000.

Accepted Answer

A) True 
 B)False

Question 12

The payroll records of a company provided the following data for the current weekly pay period ended March 12.
 $$\begin{array} { l c c r r r r } 
& \begin{array} { l } 
\text { Earnings } \
\text { to End of }
\end{array} & & \text { Federal } & \text { Medical } & & \
& \text { Previous } & \text { Gross } & \text { Income } & \text { Insurance } & \text { Union } & \text { United } \
\text { Employees } & \text { Week } & \text { Pay } & \text { Taxes } & \text { Deduction } & \text { Dues } & \text { Way } \
\text { D. Hui } &\$ 5 , 8 0 0& \$ 8 0 0& \$ 1 2 0 & \$3 5 & \$ 1 0 &\$ 1 0\
\text { B. Kirm } & 6 , 8 5 0  & 1,100 & 180 & 35 & 10 & 15 \
\text { C. Sly } & 12,900 & 1,440 & 404 & 35 & 10 & 40
\end{array}$$ 
Assume that the Social Security portion of the FICA taxes is 6.2% on the first $118,500 and the Medicare portion is 1.45% of all wages paid to each employee for this pay period.The federal and state unemployment tax rates are 0.8% and 5.4%,respectively,on the first $7,000 paid to each employee.Calculate the net pay for each employee.

Accepted Answer

The answer of The payroll records of a company provided...

Question 13

A company sold $12,000 worth of bicycles with an extended warranty.The company's experience is that warranty expense averages 2% of sales.The company should:

Accepted Answer

A)   Consider the warranty expense a remote liability since the rate is only 2%.
B)   Recognize warranty expense at the time the warranty work is performed.
C)   Recognize warranty expense and liability in the year of the sale.
D)   Consider the warranty expense a contingent liability.
E)   Recognize warranty liability when the company purchases the bicycles.F) A) and E)
G) None of the above

Question 14

When a company is obligated for sales taxes payable,it is reported as a(n) :

Accepted Answer

A)   Estimated liability.
B)   Contingent liability.
C)   Current liability.
D)   Business expense.
E)   Long-term liability.F) A) and D)
G) None of the above

Question 15

A company's employer payroll tax rates are 0.6% for federal unemployment taxes,5.4% for state unemployment taxes,6.2% for FICA social security taxes on earnings up to $118,500,and 1.45% for FICA Medicare taxes on all earnings.Compute the W-2 Wage and Tax Statement information required below for the following employees:

Accepted Answer

The answer of A company's employer payroll tax rates are...

Question 16

Unearned revenues are current liabilities.

Accepted Answer

A) True 
 B)False

Question 17

Sparks Company entered into the following transactions involving short-term notes payable.On June 18,Sparks purchased $25,000 merchandise from EquipCo.,terms 2/10,n/30.Sparks uses the perpetual inventory system.On July 19,Sparks replaced the June 18 account payable with a 60-day,$12,000 note bearing 4% annual interest in addition to paying $13,000 in cash.Sparks 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

1.Maturity date: Sep...

Question 18

Promissory notes cannot be transferred from party to party because they are nonnegotiable.

Accepted Answer

A) True 
 B)False

Question 19

A company cannot have a liability if the amount of the obligation is unknown.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A short-term note payable is a written p...

Exam 9: Accounting for Current Liabilities

On September 15,SkateWorld borrowed $70,000 cash from Mutual Bank by signing a 6%,60-day note payable. a.Prepare SkateWorld's journal entry to record the issuance of the note payable. b.Prepare SkaetWorld's journal entry to record the payment of the note at maturity.

Correct Answer
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a. \[\begin{array} { l l l }
9 / 15 &\te ...
View Answer

Correct Answer
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\[\begin{array} { l l }
\text { May } 3...
View Answer

Employee vacation benefits:

Correct Answer
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Athena Company provides employee health insurance that costs $5,000 per month.In addition,the company contributes an amount equal to 5% of the employees' $120,000 gross salary to a retirement program.The entry to record the accrued benefits for the month would include a:

Correct Answer
verified

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

Correct Answer
verified

A corporation has a $40,000 credit balance in the Income Tax Payable account.Period end information shows that the actual liability is $47,000.The company should record an entry to debit Income Tax Expense for $7,000 and credit Income Taxes Payable for $7,000.

Correct Answer
verified

A company cannot have a liability if the amount of the obligation is unknown.

Correct Answer
verified

On December 1,Watson Enterprises signed a $24,000,60-day,4% note payable as replacement of an account payable with Erikson Company.What is the journal entry that should be recorded upon signing the note?

Correct Answer
verified

Correct Answer
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Unearned revenues are current liabilities.

Correct Answer
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When a company is obligated for sales taxes payable,it is reported as a(n) :

Correct Answer
verified

Correct Answer
verified

A company sold $12,000 worth of bicycles with an extended warranty.The company's experience is that warranty expense averages 2% of sales.The company should:

Correct Answer
verified

Promissory notes cannot be transferred from party to party because they are nonnegotiable.

Correct Answer
verified

Companies may use a special bank account solely for the purpose of paying employees,by depositing an amount equal to the total employees' net pay into the account each pay period and drawing the employees' payroll checks on the account.This account is a(n) :

Correct Answer
verified

Match the following items with the appropriate designation (Current liability, Long-term liability, or Not a liability) . -Payment of a 30-year term loan due this year

Correct Answer
verified

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

Correct Answer
verified
A short-term note payable is a written p...
View Answer

Match the following items with the appropriate designation (Estimated liability, Contingent liability, or Known liability) . -Accrued wages payable

Correct Answer
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Correct Answer
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1.Maturity date: Sep...
View Answer

Exam 9: Accounting for Current Liabilities

On September 15,SkateWorld borrowed $70,000 cash from Mutual Bank by signing a 6%,60-day note payable. a.Prepare SkateWorld's journal entry to record the issuance of the note payable. b.Prepare SkaetWorld's journal entry to record the payment of the note at maturity.

Correct Answerverified a. \[\begin{array} { l l l } 9 / 15 &\te ...View AnswerShow Answer

Correct Answerverified\[\begin{array} { l l } \text { May } 3...View AnswerShow Answer

Employee vacation benefits:

Correct AnswerverifiedShow Answer

Athena Company provides employee health insurance that costs $5,000 per month.In addition,the company contributes an amount equal to 5% of the employees' $120,000 gross salary to a retirement program.The entry to record the accrued benefits for the month would include a:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A corporation has a $40,000 credit balance in the Income Tax Payable account.Period end information shows that the actual liability is $47,000.The company should record an entry to debit Income Tax Expense for $7,000 and credit Income Taxes Payable for $7,000.

Correct AnswerverifiedShow Answer

A company cannot have a liability if the amount of the obligation is unknown.

Correct AnswerverifiedShow Answer

On December 1,Watson Enterprises signed a $24,000,60-day,4% note payable as replacement of an account payable with Erikson Company.What is the journal entry that should be recorded upon signing the note?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Unearned revenues are current liabilities.

Correct AnswerverifiedShow Answer

When a company is obligated for sales taxes payable,it is reported as a(n) :

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A company sold $12,000 worth of bicycles with an extended warranty.The company's experience is that warranty expense averages 2% of sales.The company should:

Correct AnswerverifiedShow Answer

Promissory notes cannot be transferred from party to party because they are nonnegotiable.

Correct AnswerverifiedShow Answer

Companies may use a special bank account solely for the purpose of paying employees,by depositing an amount equal to the total employees' net pay into the account each pay period and drawing the employees' payroll checks on the account.This account is a(n) :

Correct AnswerverifiedShow Answer

Match the following items with the appropriate designation (Current liability, Long-term liability, or Not a liability) . -Payment of a 30-year term loan due this year

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedA short-term note payable is a written p...View AnswerShow Answer

Match the following items with the appropriate designation (Estimated liability, Contingent liability, or Known liability) . -Accrued wages payable

Correct AnswerverifiedShow Answer

Correct Answerverified1.Maturity date: Sep...View AnswerShow Answer

Correct Answer
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a. \[\begin{array} { l l l }
9 / 15 &\te ...
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\[\begin{array} { l l }
\text { May } 3...
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A short-term note payable is a written p...
View Answer

Correct Answer
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1.Maturity date: Sep...
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