Exam 11: Current Liabilities and Payroll Accounting

The matching principle requires that interest expense not be accrued on a note payable until the note is paid,even if the end of an accounting period occurs between the signing of a note payable and its maturity date.

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

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

Identify and explain the types of employer payroll taxes.

All of the following statements regarding liabilities are true except:

A company can have a liability even if the amount of the obligation is unknown.

To compute the amount of tax withheld from an employee's pay,employers can use a __________________________ table.

A company has 2 employees.The company's total salaries for the month of January were $8,000.The federal income tax rate for both employees is 15%.The FICA-social security tax rate is 6.2% and the FICA-Medicare tax rate is 1.45%.Calculate the amount of employee taxes withheld and prepare the company's journal entry to record the January payroll assuming these were the only deductions.

On November 1,Carter Company signed a 120-day,10% note payable,with a face value of $9,000.Carter made the appropriate year-end accrual.What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made?

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

Halo 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.

Starling Company sells merchandise for $24,000 cash on March 31 (cost of merchandise is $12,300).The sales tax law requires Starling to collect 8.25% sales tax on every dollar of merchandise sold.Record the entry for the sale and its applicable sales tax.

A company sells its product subject to a warranty that covers the cost of parts for repairs during the six months after the date of sale.Warranty costs are estimated to be 6% of sales.During the month of June,the company performed warranty work and used $12,000 of parts to perform the warranty work.Sales for June were $450,000. 1.Record the warranty expense for the month of June. 2.Record the costs of the warranty work completed in June. 3.If the Estimated Warranty Liability account had a credit balance of $10,000 on May 31,what is the account balance at June 30?

Phil Phoenix is paid on a monthly basis.For the month of January of the current year,he earned a total of $8,288.FICA tax for Social Security is 6.2% and the FICA tax 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 amount of the employer's payroll taxes expenses for this employee?

A lawsuit is an example of a contingent liability for the defendant.

Employers must pay FICA taxes equal in amount to the FICA taxes withheld from their employees.

Describe how to account for and report on contingent liabilities.

Unearned revenues are liabilities.

The times interest earned ratio reflects: