Exam 15: Accounting Principles and Contingent Liabilities in Business Operations

Assuming a FICA tax rate of 7.65% on the first $106,800 in wages, and a federal income tax rate of 20% on all wages, what would be an employee's net pay for the year if he earned $92,000?

A company uses a sales journal, cash receipts journal, purchases journal, cash pay- ments journal, and a general journal. A cash sales return would be recorded in the

Kim Black plans to buy a truck for $24,000 after 3 years. If the interest rate is 6%, how much money should Kim set aside today for the purchase?

Which of the following items would not be identified if a contingent liability were disclosed in a financial statement note?

Which table has a factor of 1.00000 for 1 period at every interest rate?

FICA taxes and federal income taxes are levied on employees' earnings without limit.

Amy Brown plans to buy a surround sound stereo system for $1,100 after 3 years. If the interest rate is 6%, how much money should Amy set aside today for the purchase?

Match the items below by entering the appropriate code letter in the space provided.

Gates Company maintains four special journals and a general journal to record its transactions. Using the code below, indicate in the space provided the appropriate journal for recording the transactions listed.

Sam Geller had earned (accumulated) salary of $99,000 through November 30. His December salary amounted to $9,000. Lara Lane began employment on December 1 and will be paid her first month's salary of $6,000 on December 31. Income tax withholding for December for each employee is as follows: The following payroll tax rates are applicable: *Less a credit equal to the state unemployment contribution Instructions Record the payroll for the two employees at December 31 and record the employer's share of payroll tax expense for the December 31 payroll.

Listed below are various column headings that may appear in special journals. Using the following code letters, identify for each column heading (1) the special journal where the column heading would appear, and (2) whether the amounts entered under the column heading would be posted in total, individually, or both in total and individually. (Note: column headings may appear in more than one special journal)

An advantage of using a subsidiary ledger is that one employee must post to both the subsidiary ledger and the general ledger.

A higher discount rate produces a higher present value.

An employer's estimated cost for postretirement benefits for its employees should be

A payroll tax expense which is borne entirely by the employer is the federal _______________ tax.

Compound interest is computed on the principal and any interest earned that has not been paid or received.

Peter Johnson invests $35,516.80 now for a series of $5,000 annual returns beginning one year from now. Peter will earn 10% on the initial investment. How many annual payments will Peter receive?

Howard Company is about to issue $2,000,000 of 5-year bonds, with a stated rate of interest of 10%, payable semiannually. The market rate for such securities is 12%. How much can Howard expect to receive for the sale of these bonds?

If an event makes it probable that a company will experience a cash outflow but it cannot reasonably estimate the amount, the contingent liability