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Exam 9: Reporting and Analyzing Current Liabilities

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Question 31

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Gross pay is:

A) Take-home pay.
B) Total compensation earned by an employee before any deductions.
C) Salaries after taxes are deducted.
D) Deductions withheld by an employer.
E) The amount of the paycheck.

F) A) and E)
G) A) and D)

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Question 32

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

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wage brack...

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Question 33

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The employer should record payroll deductions as:

A company sells computers for $1,800 each.Each computer has a two-year warranty that covers replacement of defective parts.It is estimated that 2% of all computers sold will be returned under the warranty with an average cost of $150 each.During November,the company sold 30,000 computers;.400 computers were serviced under the warranty during November at a total cost of $55,000.The balance in the Estimated Warranty Liability account at November 1 was $29,000.What is the company's warranty expense for the month of November?

All expected future payments are liabilities.

Describe how to account for and report on contingent liabilities.

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.

A lawsuit is an example of a contingent liability for the defendant.

Liabilities:

Each employee records the number of withholding allowances claimed on form W-4,the withholding allowance certificate that is filed with the employer.

Mission Company has three employees: -What are Mission Company's total August payroll taxes for Cain?

A special bank account used solely for the purpose of paying employees is created by depositing the amount of each employees' net pay into the account every pay period.This account is referred to as a(n) :

Rambling Company has an employee whose total salary for the month of January totaled $20,000.The federal income tax rate for this employee is 15%,the FICA Social Security tax is 6.2%,and the FICA Medicare tax is 1.45%.How would the company accrue the January salaries expense and withholding of January taxes for this employee?

DuPage Company agrees to pay an amount for medical insurance equal to $12,000 and contribute an additional 15% of the employees' $100,000 gross salary to a retirement program.How would the company record this transaction?

A company borrowed $60,000 on a 60-day,10% note payable from its bank.Compute the total cash payment at the note's maturity.

A company sells its product subject to a warranty that covers the cost of parts for repairs during the six months after the date of sale. Warranty costs are estimated to be 6% of sales. During the month of June, the company performed warranty work and used $12,000 worth of parts for the warranty repairs. The total sales for June were equal to $450,000. 1. Record the warranty expense for the month of June. 2. Record the costs of the warranty work completed in June. 3. If the Estimated Warranty Liability account had a credit balance of $10,000 on May 31, what is the account balance at June 30?

A company's payroll information for the month of May follows: On May 31 the company issued Check No.335 payable to the Payroll Bank Account 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 pay for the May payroll.The federal and state unemployment tax rates are 0.8% 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.

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 company sells leaf blowers for $170 each.Each unit has a three-year warranty that covers replacement of defective parts.It is estimated that 4% of all leaf blowers sold will be returned under the warranty at an average cost of $30 each.During October,the company sold 400,000 leaf blowers; 800 leaf blowers were serviced under the warranty during October at a total cost of $25,000.The balance in the Estimated Warranty Liability account on October 1 was $12,500.What is the company's warranty expense for the month of October?

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