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Exam 11: Current Liabilities and Payroll Accounting

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Question 71

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Gross pay is:

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

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Question 72

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An employer has an employee benefit package that includes employer-paid health insurance and an employer-paid retirement program. During January, the employer paid $7,500 for health insurance, and contributed to the employee retirement program 10% of the employees' $150,000 gross salaries. Prepare the journal entry to record these employee benefits.

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Question 73

Multiple Choice

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Known liabilities:

Advance ticket sales totaling $6,000,000 cash would be recognized as follows:

Amounts received in advance from customers for future products or services:

A potential lawsuit claim is recorded when the claim can be reasonably estimated and it is reasonably possible.

ZMart had income before interest expense and income taxes of $12,581 million and interest expense of $1,063 million. XMart had income before interest expense and income taxes of $3,596 million and interest expense of $1,143 million. Calculate the times interest earned for each company and comment on the results.

A _____________________ shows the pay period dates, hours worked, gross pay, deductions, and net pay of each employee for every pay period.

Federal depository banks are authorized to accept deposits of amounts payable to the federal government.

A high merit rating means that an employer has high employee turnover or seasonal hiring.

Phil Phoenix is paid monthly. For the month of January of the current year, he earned a total of $8,288. The FICA tax rate for social security is 6.2% and the FICA tax rate for Medicare is 1.45%. The FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The amount of Federal Income Tax withheld from his earnings was $1,375.17. What is the total amount of taxes withheld from the Phoenix's earnings?

______________________ is the total compensation an employee earns including wages, salaries, commissions, bonuses, and any compensation earned before deductions such as taxes.

An estimated liability is a known obligation of an uncertain amount that can at least be reasonably estimated.

All of the following statements regarding FICA taxes are True except:

A bank that is authorized to accept deposits of amounts payable to the federal government is a:

The wage bracket withholding table is used to:

The amount of federal income tax withheld depends on the employee's annual earnings rate and the number of withholding allowances claimed by the employee.

A company's income before interest expense and income taxes is $302,400, and its interest expense is $72,000. Calculate the company's times interest earned ratio.

Promissory notes are nonnegotiable meaning that they cannot be transferred from party to party.

Employers must keep certain payroll records, including individual earnings reports for each employee.