Question 1

Furniture World is required by law to collect and remit sales taxes to the state.If Furniture World has $78,000 of cash sales that are subject to a 6% sales tax,what is the journal entry to record the cash sales?

Accepted Answer

A)  Debit Cash $82,680; credit Sales $78,000; credit Sales Taxes Payable $4,680.
B)  Debit Sales Taxes Payable $4,680; debit Cash $73,220; credit Sales $78,000.
C)  Debit Cash $78,000; credit Sales $78,000; and record the taxes when paid.
D)  Debit Cash $78,000; credit Sales $73,320; credit Sales Taxes Payable $4,680.
E)  Debit Accounts Receivable $82,680; credit Sales $78,000; credit Sales Taxes Payable $4,680.F) A) and D)
G) C) and E)

Question 2

An estimated liability:

Accepted Answer

A)  Is an unknown liability of a certain amount.
B)  Is a known obligation of an uncertain amount that can be reasonably estimated.
C)  Is a liability that may occur if a future event occurs.
D)  Can be the result of a lawsuit.
E)  Is not recorded until the amount is known for certain.F) B) and C)
G) A) and B)

Question 3

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 $12,800 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:

Accepted Answer

A)  Debit Warranty Expense $17,800; credit Estimated Warranty Liability $17,800.
B)  Debit Warranty Expense $9,400; credit Estimated Warranty Liability $9,400.
C)  Debit Warranty Expense $14,400; credit Estimated Warranty Liability $14,400.
D)  Debit Estimated Warranty Liability $9,400; credit Parts Inventory $9,400.
E)  Debit Estimated Warranty Liability $17,800; credit Parts Inventory $17,800.F) None of the above
G) A) and C)

Question 4

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 $127,200,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:
Employee Gross Earnings Federal Income Taxes Withheld
A.Baylor $114,000 $17,600
C.Jasmine 52,000 8,200
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………………………… ________ ________

Accepted Answer

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

Question 5

On May 22,Jarrett Company borrows $7,500 from Fairmont Financing,signing a 90-day,8%,$7,500 note.What is the journal entry needed to record the transaction by Jarrett Company?

Accepted Answer

A)  Debit Cash $7,500; credit Accounts Payable $7,500.
B)  Debit Accounts Payable $7,500; credit Notes Payable $7,500.
C)  Debit Cash $7,650; credit Notes Payable $7,650.
D)  Debit Cash $7,500; credit Notes Payable $7,500.
E)  Debit Notes Receivable $7,500; credit Cash $7,500.F) A) and B)
G) B) and E)

Question 6

Companies with many employees often use a special ________ account to pay employees.

Accepted Answer

The answer of Companies with many employees often use a...

Question 7

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

Accepted Answer

wage brack...

Question 8

Interest expense is not:

Accepted Answer

A)  Incurred on current liabilities.
B)  Likely to stay the same when sales change.
C)  A fixed expense.
D)  Likely to fluctuate when sales change.
E)  A factor in determining a company's borrowing risk.F) None of the above
G) D) and E)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

A single liability cannot be divided between current and noncurrent liabilities.

Accepted Answer

A) True 
 B)False

Question 11

On December 1,Watson Enterprises signed a $24,000,60-day,4% note payable as replacement of an account payable with Erikson Company.What amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)

Accepted Answer

A)  $0
B)  $80
C)  $320
D)  $960
E)  $160F) A) and D)
G) B) and C)

Question 12

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 E)
G) C) and E)

Question 13

FICA taxes include:

Accepted Answer

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) D) and E)
G) C) and D)

Question 14

Unearned revenues are current liabilities.

Accepted Answer

A) True 
 B)False

Question 15

Carson Company faces a probable loss on a pending lawsuit where the amount of the loss is estimated to be $500,000.The journal entry to recognize the potential loss is:

Accepted Answer

A)  Debit Prepaid Legal Expense $500,000; credit Contingent Legal Liability $500,000.
B)  Debit Legal Expense $500,000; credit Lawsuit Payable $500,000.
C)  Debit Contingent Legal Expense $500,000,credit Contingent Legal Liability $500,000.
D)  Debit Lawsuit Payable $500,000,credit Contingent Legal Liability $500,000.
E)  No journal entry is required.F) B) and C)
G) C) and D)

Question 16

Gross pay is:

Accepted Answer

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) C) and D)
G) A) and B)

Question 17

Times interest earned is calculated by:

Accepted Answer

A)  Multiplying interest expense by income.
B)  Dividing interest expense by income before interest expense.
C)  Dividing income before interest expense and income taxes by interest expense.
D)  Multiplying interest expense by income before interest expense.
E)  Dividing income before interest expense by interest expense and income taxes.F) None of the above
G) C) and D)

Question 18

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?

Accepted Answer

A)  Debit Vacation Benefits Expense $1,500; credit Prepaid Vacation Benefits $1,500.
B)  Debit Vacation Benefits Expense $1,500; credit Vacation Benefits Payable $1,500.
C)  Debit Payroll Tax Expense $1,500; credit Payroll Taxes Payable $1,500.
D)  Debit Prepaid Vacation Benefits $1,500; credit Vacation Benefits Payable $1,500.
E)  Debit Vacation Benefits Payable; credit Vacation Benefits Expense $1,500.F) A) and B)
G) A) and C)

Question 19

During June,Vixen Company sells $850,000 in merchandise that has a one year warranty.Experience shows that warranty expenses average about 3% of the selling price.Customers returned $14,000 of merchandise for warranty replacement during the month.The entry to settle the customer warranties is:

Accepted Answer

A)  Debit Warranty Expense $11,500; credit Estimated Warranty Liability $11,500.
B)  Debit Estimated Warranty Liability $25,500; credit Warranty Expense $25,500.
C)  Debit Warranty Expense $14,000; credit Estimated Warranty Liability $14,000.
D)  Debit Estimated Warranty Liability $11,500; credit Merchandise Inventory $11,500.
E)  Debit Estimated Warranty Liability $14,000; credit Merchandise Inventory $14,000.F) C) and E)
G) A) and D)

Question 20

Companies with many employees rarely use a special payroll bank account from which to pay employees.

Accepted Answer

A) True 
 B)False

Exam 9: Reporting and Analyzing Current Liabilities

On May 22,Jarrett Company borrows $7,500 from Fairmont Financing,signing a 90-day,8%,$7,500 note.What is the journal entry needed to record the transaction by Jarrett Company?

Correct Answer
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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?

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 amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)

Correct Answer
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During June,Vixen Company sells $850,000 in merchandise that has a one year warranty.Experience shows that warranty expenses average about 3% of the selling price.Customers returned $14,000 of merchandise for warranty replacement during the month.The entry to settle the customer warranties is:

Correct Answer
verified

A single liability cannot be divided between current and noncurrent liabilities.

Correct Answer
verified

Times interest earned is calculated by:

Correct Answer
verified

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

Correct Answer
verified
wage brack...
View Answer

Companies with many employees rarely use a special payroll bank account from which to pay employees.

Correct Answer
verified

Correct Answer
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FICA taxes include:

Correct Answer
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An estimated liability:

Correct Answer
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Furniture World is required by law to collect and remit sales taxes to the state.If Furniture World has $78,000 of cash sales that are subject to a 6% sales tax,what is the journal entry to record the cash sales?

Correct Answer
verified

Unearned revenues are current liabilities.

Correct Answer
verified

Interest expense is not:

Correct Answer
verified

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

Correct Answer
verified

Companies with many employees often use a special ________ account to pay employees.

Correct Answer
verified

Carson Company faces a probable loss on a pending lawsuit where the amount of the loss is estimated to be $500,000.The journal entry to recognize the potential loss is:

Correct Answer
verified

Correct Answer
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Gross pay is:

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

Exam 9: Reporting and Analyzing Current Liabilities

On May 22,Jarrett Company borrows $7,500 from Fairmont Financing,signing a 90-day,8%,$7,500 note.What is the journal entry needed to record the transaction by Jarrett Company?

Correct AnswerverifiedShow Answer

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?

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 amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)

Correct AnswerverifiedShow Answer

During June,Vixen Company sells $850,000 in merchandise that has a one year warranty.Experience shows that warranty expenses average about 3% of the selling price.Customers returned $14,000 of merchandise for warranty replacement during the month.The entry to settle the customer warranties is:

Correct AnswerverifiedShow Answer

A single liability cannot be divided between current and noncurrent liabilities.

Correct AnswerverifiedShow Answer

Times interest earned is calculated by:

Correct AnswerverifiedShow Answer

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

Correct Answerverifiedwage brack...View AnswerShow Answer

Companies with many employees rarely use a special payroll bank account from which to pay employees.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

FICA taxes include:

Correct AnswerverifiedShow Answer

An estimated liability:

Correct AnswerverifiedShow Answer

Furniture World is required by law to collect and remit sales taxes to the state.If Furniture World has $78,000 of cash sales that are subject to a 6% sales tax,what is the journal entry to record the cash sales?

Correct AnswerverifiedShow Answer

Unearned revenues are current liabilities.

Correct AnswerverifiedShow Answer

Interest expense is not:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Companies with many employees often use a special ________ account to pay employees.

Correct AnswerverifiedShow Answer

Carson Company faces a probable loss on a pending lawsuit where the amount of the loss is estimated to be $500,000.The journal entry to recognize the potential loss is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Gross pay is:

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

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wage brack...
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