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Exam 9: Reporting and Analyzing Current Liabilities

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Question 61

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Gladstone Company liabilities include $13,500 of accounts payable, $8,000 of wages payable, $6,300 of unearned revenue, $32,000 note payable due in 18 months, $70,000 of 10-year bonds payable, and $41,000 of taxes payable. Gladstone's current liabilities equal:

A) $59,800
B) $68,800
C) $60,800
D) $62,500
E) $100,800

F) D) and E)
G) B) and C)

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Question 62

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FICA taxes include:

A) Social Security and Medicare taxes.
B) Charitable giving.
C) Employee state income tax.
D) Federal and state unemployment taxes.
E) Employee federal income tax.

F) A) and B)
G) B) and D)

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Question 63

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______________ are amounts owed to suppliers for products or services purchased on credit.

Identify and explain the types of employer payroll taxes, both those that are withheld from employees and those that are the responsibility of the employer.

A liability may exist even if there is uncertainty about whom to pay, when to pay, or how much to pay.

Explain the responsibilities of and the accounting by employers for deductions from employee payroll.

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

A company sells tablet computers for $1,300 each. The price includes a two-year warranty. During the current year, the company sells 400 tablets. On the basis of past experience, the warranty repair costs are estimated to be $280 per tablet. The actual warranty costs (paid in cash) by the company during the current year were $65,000. Prepare general journal entries to record the (a) estimated warranty expense and (b) warranty repair costs during current year.

Unearned revenues are current liabilities.

Deacon Company provides you with following information related to payroll transactions for the month of May. Prepare journal entries to record the transactions for May. a. Record the May payroll using the payroll register information given above. b. Record the employer's payroll taxes resulting from the May payroll. The company had a state unemployment tax rate of 3.5% of the first $7,000 paid each employee. Only $42,000 of the current months salaries are subject to unemployment taxes. The federal rate is 0.6%. c. Issue a check to Reliant Bank in payment of the May FICA and employee taxes. d. Issue a check to the state for the payment of the SUTA taxes for the month of May. e. Issue a check to Reliant Bank for the first quarter in FUTA taxes in the amount of $1,020.

Employers must pay FICA taxes twice the amount of the FICA taxes withheld from their employees.

A short-term note payable:

Obligations not due within one year or the company's operating cycle, whichever is longer, are reported as current liabilities.

Obligations due within one year or the company's operating cycle, whichever is longer, are ________________________.

Employees earn vacation pay at the rate of one day per month. During the month of June, 10 employees qualify for one vacation day each. Their average daily wage is $150 per day. Which of the following is the necessary adjusting journal entry to record the June vacation benefits?

A contingent liability is:

A company sold $12,000 worth of bicycles with an extended warranty. It estimates that 2% of these sales will result in warranty work. The company should:

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 per calendar year, 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: A.Baylor C.Jasmine W-2 Information: ________ ________ Federal Income Tax Withheld ________ ________ Wages, Tips, Other Compensation ________ ________ Social Security Tax Withheld ________ ________ Social Security Wages ________ ________ Medicare Tax Withheld ________ ________ Medicare Wages ________ ________

An employer has an employee benefit package that includes employer-paid health insurance and an employer-paid retirement program. During March, the employer paid $5,500 for health insurance, and contributed to the employee retirement program 10% of the employees' $120,000 gross salaries. Prepare the journal entry to record these employee benefits.

During August, Boxer Company sells $356,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 5% of the selling price. The warranty liability account has a credit balance of $1,800 before adjustment. Customers returned merchandise for warranty repairs during the month that used $9,400 in parts for repairs. The entry to record the customer warranty repairs is: