Question 1

A liability is incurred when income is earned because income tax expense is created by earning income.

Accepted Answer

A) True 
 B)False

Question 2

What is a short-term note payable? Explain the accounting issues related to notes payable.

Accepted Answer

A short-term note payable is a written p

Question 3

Match between columns
                        Premises: Known obligations of an uncertain amount that can be reasonably estimated.
Taxes that fund Social Security and Medicare, assessed on both employer and employees under the Federal Insurance Contributions Act.
Payroll taxes on employers assessed by the federal government to support the federal unemployment insurance program.
A seller's obligation to replace or correct a product or service that fails to perform as expected within a specified period.
Gross pay less all tax and voluntary deductions.
Obligations of a company requiring payment in more than one year or operating cycle.
A table of amounts of income tax to be withheld from employees' wages.
A potential obligation that depends on a future event arising from a past transaction.
A number indicated on an employee's Form W-4 that is used to reduce the amount of federal income tax withheld from an employee's pay.
A measure provided by a state to employers that reflects a company's stability in employing workers.

Accepted Answer

The Answer of Long-term liability and Wage bracket withholding table is...

Question 4

Deposits of amounts payable to the federal government may be paid through federal depository banks.

Accepted Answer

A) True 
 B)False

Question 5

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

Question 6

On September 1, Knack Company signed a $50,000, 90-day, 5% note payable with Central Savings Bank. What is the journal entry that should be recorded by Knack upon maturity of the note? (Use 360 days a year.)

Accepted Answer

A) Debit Notes Payable $50,625; credit Cash $50,625. 
B) Debit Notes Payable $50,000; debit Interest Expense $625; credit Cash $50,625. 
C) Debit Interest Expense $625; credit Interest Payable $625. 
D) Debit Notes Payable $50,000; credit Interest Revenue $625; credit Cash $49,375. 
E) Debit Cash $50,625; credit Notes Receivable $50,625. 
A) Debit Notes Payable $50,625; credit Cash $50,625. 
B) Debit Notes Payable $50,000; debit Interest Expense $625; credit Cash $50,625. 
C) Debit Interest Expense $625; credit Interest Payable $625. 
D) Debit Notes Payable $50,000; credit Interest Revenue $625; credit Cash $49,375. 
E) Debit Cash $50,625; credit Notes Receivable $50,625.

Question 7

Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $32,500 to be paid during January of the following year. The journal entry on December 31 to record the bonuses is:

Accepted Answer

A) Debit Unearned Bonuses $32,500; credit Bonus Payable $32,500. 
B) No entry since the bonuses are not paid until January. 
C) Debit Employee Bonus Expense $32,500; credit Prepaid Employee Bonus $32,500. 
D) Debit Estimated Bonus Payable $32,500; credit Cash $32,500. 
E) Debit Employee Bonus Expense $32,500; credit Bonus Payable $32,500. 
A) Debit Unearned Bonuses $32,500; credit Bonus Payable $32,500. 
B) No entry since the bonuses are not paid until January. 
C) Debit Employee Bonus Expense $32,500; credit Prepaid Employee Bonus $32,500. 
D) Debit Estimated Bonus Payable $32,500; credit Cash $32,500. 
E) Debit Employee Bonus Expense $32,500; credit Bonus Payable $32,500.

Question 8

A contingent liability is a potential obligation that depends on a future event arising from a past transaction or event.

Accepted Answer

A) True 
 B)False

Question 9

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

Question 10

On April 12, Hong Company agrees to accept a 60-day, 10%, $4,500 note from Indigo Company to extend the due date on an overdue account. What is the journal entry that Indigo Company would make, when it records payment of the note on the maturity date? (Use 360 days a year.)

Accepted Answer

A) Debit Cash $4,575; credit Interest Revenue $75; credit Notes Payable $4,500. 
B) Debit Notes Payable $4,500; credit Interest Expense $75, credit Cash $4,425. 
C) Debit Notes Payable $4,500; debit Interest Expense $75; credit Cash $4,575. 
D) Debit Cash $4,575; credit Interest Revenue $75; credit Notes Receivable $4,500. 
E) Debit Notes Payable $4,500; debit Interest Expense $112; credit Cash $4,612. 
A) Debit Cash $4,575; credit Interest Revenue $75; credit Notes Payable $4,500. 
B) Debit Notes Payable $4,500; credit Interest Expense $75, credit Cash $4,425. 
C) Debit Notes Payable $4,500; debit Interest Expense $75; credit Cash $4,575. 
D) Debit Cash $4,575; credit Interest Revenue $75; credit Notes Receivable $4,500. 
E) Debit Notes Payable $4,500; debit Interest Expense $112; credit Cash $4,612.

Question 11

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.

Accepted Answer

A) True 
 B)False

Question 12

Identify and discuss the factors involved in computing federal income taxes withheld from employees.

Accepted Answer

The amount of federal income tax withhel

Question 13

The amount of federal income taxes withheld from an employee's paycheck is determined by:

Accepted Answer

A) The amount of social security taxes withheld. 
B) Multiplying the gross pay by 6.2%. 
C) Tax tables provided by the state in which the employee works. 
D) The employer's merit rating. 
E) Current earnings for the pay period and number of withholding allowances the employee claims. 
A) The amount of social security taxes withheld. 
B) Multiplying the gross pay by 6.2%. 
C) Tax tables provided by the state in which the employee works. 
D) The employer's merit rating. 
E) Current earnings for the pay period and number of withholding allowances the employee claims.

A liability is incurred when income is earned because income tax expense is created by earning income.

What is a short-term note payable? Explain the accounting issues related to notes payable.

Deposits of amounts payable to the federal government may be paid through federal depository banks.

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:

On September 1, Knack Company signed a $50,000, 90-day, 5% note payable with Central Savings Bank. What is the journal entry that should be recorded by Knack upon maturity of the note? (Use 360 days a year.)

Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $32,500 to be paid during January of the following year. The journal entry on December 31 to record the bonuses is:

A contingent liability is a potential obligation that depends on a future event arising from a past transaction or event.

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?

On April 12, Hong Company agrees to accept a 60-day, 10%, $4,500 note from Indigo Company to extend the due date on an overdue account. What is the journal entry that Indigo Company would make, when it records payment of the note on the maturity date? (Use 360 days a year.)

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.

Identify and discuss the factors involved in computing federal income taxes withheld from employees.

The amount of federal income taxes withheld from an employee's paycheck is determined by:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

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Exam 11: Current Liabilities and Payroll Accounting

A liability is incurred when income is earned because income tax expense is created by earning income.

What is a short-term note payable? Explain the accounting issues related to notes payable.

Deposits of amounts payable to the federal government may be paid through federal depository banks.

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:

On September 1, Knack Company signed a $50,000, 90-day, 5% note payable with Central Savings Bank. What is the journal entry that should be recorded by Knack upon maturity of the note? (Use 360 days a year.)

Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $32,500 to be paid during January of the following year. The journal entry on December 31 to record the bonuses is:

A contingent liability is a potential obligation that depends on a future event arising from a past transaction or event.

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?

On April 12, Hong Company agrees to accept a 60-day, 10%, $4,500 note from Indigo Company to extend the due date on an overdue account. What is the journal entry that Indigo Company would make, when it records payment of the note on the maturity date? (Use 360 days a year.)

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.

Identify and discuss the factors involved in computing federal income taxes withheld from employees.

The amount of federal income taxes withheld from an employee's paycheck is determined by:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Filters