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Exam 10: Current Liabilities and Payroll

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Question 91

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According to a summary of the payroll of Scotland Company,$450,000 was subject to the 6.0% social security tax and $500,000 was subject to the 1.5% Medicare tax.Federal income tax withheld was $98,000.Also,$15,000 was subject to state 4.2% and federal 0.8% unemployment taxes.The journal entry to record accrued salaries would include a

A) debit to Salary Payable of $450,000
B) credit to Salary Payable of $500,000
C) debit to Salary Expense of $500,000
D) credit to Salary Expense of $450,000

E) All of the above
F) C) and D)

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Question 92

Multiple Choice

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Which of the following would most likely be classified as a current liability?

A) two-year notes payable
B) bonds payable
C) mortgage payable
D) unearned rent

E) A) and B)
F) A) and C)

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Question 93

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The journal entry a company uses to record the estimated product warranty liability expense is

According to a summary of the payroll of Scotland Company,$450,000 was subject to the 6.0% social security tax and $500,000 was subject to the 1.5% Medicare tax.Federal income tax withheld was $98,000.Also,$15,000 was subject to state 4.2% and federal 0.8% unemployment taxes. a Journalize the entry to record the accrual of payroll. b Journalize the entry to record the accrual of payroll taxes.

The payroll register is a multicolumn form used to assemble the payroll-related data for all employees.

Taxes deducted from an employee's earnings to finance social security and Medicare benefits are called FICA taxes.

On June 1,Davis Inc.issued an $84,000,5%,120-day note payable to Garcia Company.Assume that the fiscal year of Garcia ends June 30.Using the 360-day year,what is the amount of interest revenue recognized by Garcia in the following year?

A defined contribution plan promises employees a fixed annual pension benefit.

All long-term liabilities eventually become current liabilities.

The journal entry to record the issuance of a note for the purpose of converting an existing account payable would be

Notes may be issued

Anderson Co.issued a $50,000,60-day,discounted note to National Bank.The discount rate is 6%.At maturity,assuming a 360-day year,the borrower will pay

Aqua Construction installs swimming pools.It calculates that warranty obligations are 5% of sales.For the year just ending,Aqua's sales were $1,500,000.Previous quarterly entries debiting Warranty Expense totaled $48,700.Determine the estimated warranty expense for the year and make the journal entry necessary to bring the account to the needed balance.

Receiving payment prior to delivering goods or services causes a current liability to be incurred.

In a defined benefits plan,the employer bears the investment risks in funding a future retirement income benefit.

Sadie White receives an hourly rate of $30,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,48; federal income tax withheld,$300; social security tax rate,6.0%; and Medicare tax rate,1.5%.What is the net amount to be paid to White?

The journal entry a company uses to record fully funded pension rights for its salaried employees at the end of the year is

The use of a separate payroll bank account is not an advantageous control,because it creates more complexity in reconciliation functions for a company and invites theft.