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Exam 9: Accounting for Current Liabilities

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Question 111

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Trey Morgan is an employee who is paid monthly.For the month of January of the current year,he earned a total of $4,538.The FICA tax 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 for both the employee and the employer.The amount of federal income tax withheld from his earnings was $680.70. -His net pay for the month is:

A) $3,510.14
B) $3,857.30
C) $4,190.84
D) $4,538.00
E) $3,162.98

F) B) and E)
G) A) and B)

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Question 112

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A company sells sofas with a 6-month warranty.In January,the company sold 100,000 sofas at $1,750 each; and 500 sofas needed repairs during that same month.The total repairs amounted to $85,000 costs from the upholstery materials inventory.It is estimated that 2% of all units sold will need repairs under warranty at an estimated cost of $200 per unit.Prepare the journal entries to record (a)estimated warranty expense for January and (b)warranty repair costs for January.

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Question 113

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A company estimates that warranty expense will be 4% of sales.The company's sales for the current period are $185,000.The current period's entry to record the warranty expense is:

If a company has advance ticket sales totaling $2,000,000 for the upcoming football season,the receipt of cash would be journalized as:

Kelso had income before interest expense and income taxes of $570 million and interest expense of $37 million.Calculate Kelso' times interest earned.

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?

An employee earned $37,000 during the year working for an employer when the maximum limit for Social Security was $118,500.The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%.The employee's annual FICA taxes amount is:

Match the following items with the appropriate designation (Estimated liability, Contingent liability, or Known liability) . -Warranty on products sold this year

An employee earns $5,500 per month working for an employer.The FICA tax rate for Social Security is 6.2% of the first $118,500 of earnings 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 $182 in federal income taxes withheld.The employee has voluntary deductions for health insurance of $150 and contributes $75 to a retirement plan each month.What is the amount the employer should record as payroll taxes expense for the employee for the month of January?

A table that shows the amount of federal income tax to be withheld from an employee's pay is the:

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

Experience shows that the default rate on liabilities increases sharply when times interest earned falls below 1.5 to 2.0 and remains at that level or lower for several time periods.

The employer should record deductions from employee pay as:

What are known current liabilities? Cite at least two examples of known current liabilities.

Debt guarantees are:

Santa Barbara Express has 4 sales employees,each of whom earns $5,000 per month and is paid on the last working day of the month.Each employee's wages are subject to FICA social security taxes of 6.2% and Medicare taxes of 1.45% on all wages.Withholding for each employee also includes federal income tax of 16% and monthly medical insurance premiums of $110 for each employee. a.Prepare the general journal entry to accrue the monthly sales salaries expense at January 31. b.The employer payroll taxes for Santa Barbara Express include FICA taxes,federal unemployment taxes of 0.6% of the first $7,000 paid each employee,and state unemployment taxes of 4.0% of the first $7,000 paid to each employee.Prepare the journal entry to record the employer's payroll taxes at January 31 for Santa Barbara Express.(Assume that none of the employees has reached the unemployment limit of $7,000.)

The difference between the amount borrowed and the amount repaid is referred to as ________.

A ________ is a written promise to pay a specified amount on a definite future date within one year or the company's operating cycle,whichever is longer.

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 current period's entry to record the warranty expense is:

Portia Grant is an employee who is paid monthly.For the month of January of the current year,she earned a total of $8,260.The FICA tax 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 FUTA tax rate of 0.6% and the SUTA tax rate of 5.4% are applied to the first $7,000 of an employee's pay.The amount of federal income tax withheld from her earnings was $1,325.17.What is the total amount of taxes withheld from the Portia's earnings? (Round your intermediate calculations to two decimal places.)