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Exam 9: Accounting for Current Liabilities

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Question 61

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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?

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) A) and C)

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Question 62

Multiple Choice

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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?

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) D) and E)
G) B) and E)

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Question 63

Multiple Choice

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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 $128,400 of employee earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings.The FUTA tax rate of .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.Her net pay for the month is: (Round your intermediate calculations to two decimal places.)

A note payable cannot be sold or transferred under any circumstance.

Hollow Company provides you with following information for two of its employees.The company is subject to the following taxes. Compute amounts for each of these four taxes as applied to each employee's gross earnings for November.

An employee earnings report is a cumulative record of each employee's hours worked,gross earnings,deductions,and net pay.

An employer's federal unemployment taxes (FUTA) are reported:

On November 1,Alan Company signed a 120-day,8% note payable,with a face value of $9,000.What is the adjusting entry for the accrued interest at December 31 on the note? (Use 360 days a year.)

A high value for the times interest earned ratio means that a company is a lower risk borrower.

A liability is a probable future payment of assets or services that a company is presently obligated to make as a result of past transactions or events.

The Form W-2 must be given to employees before January 31 following the year covered by the Form W-2.

An employee earns $5,500 per month working for an employer.The FICA tax rate for Social Security is 6.2% of the first $128,400 earned 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 of net pay for the employee for the month of January? (Round your intermediate calculations to two decimal places.)

A short-term note payable:

The chief executive officer earns $20,000 per month.As of May 31,her gross pay was $100,000.The tax rate for Social Security is 6.2% of the first $128,400 earned 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.What is the amount of FICA - Medicare withheld from this employee for the month of June?

The report that shows the pay period dates,hours worked,gross pay,deductions,and net pay of each employee for every pay period is the payroll register.

If the end of an accounting period occurs between the signing of a note payable and its maturity date,interest expense should not be accrued until the note is paid.

In the accounting records of a defendant,lawsuits:

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 5.4% and federal unemployment taxes at the rate of 0.6%.By May 15,some employees had earned over $7,000,so only $11,000 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 company had income before interest expense and income taxes of $186,000,and its interest expense is $55,000.Calculate the company's times interest earned ratio.

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