Exam 10: Current Liabilities and Payroll

Art Parrish, the sole employee of Parrish Sales, has gross salary for March of $4,000. The entire amount is under the OASDI limit of $106,800, and thus subject to FICA. He is also subject to federal income tax at a rate of 18%. His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA. The fifth journal entry in the payroll cycle to record the payment by the company of the tax liability to the government includes a credit to Cash for $1,332.

Which of the following accounting principles requires that warranty expenses must be estimated and recognized in the same period as the related sales revenue is recognized?

Art Parrish, the sole employee of Parrish Sales, has gross salary for March of $4,000. The entire amount is under the OASDI limit of $106,800, and thus subject to FICA. He is also subject to federal income tax at a rate of 18%. His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA. Please provide the fifth journal entry in the payroll cycle to record the payment by the company of payroll taxes to the government.

Which of the following deductions must be matched by the employer, resulting in both a deduction from gross pay and an expense to the employer?

Which of the following is included in the entry to record warranty expense?

Charter Services sells a service plan for commercial computer maintenance. The price is $1,200 per year, paid in advance. On December 1, 2013, Charter sells a service plan to a new customer for cash. Please provide the journal entry to record this transaction.

Franconia Sales offers warranties on all their electronic goods. Warranty expense is estimated at 2% of sales revenue. In 2013, Franconia had $500,000 of sales. In the same year, Franconia paid out $7,500 of warranty payments. Which of the following is the entry needed to record the disbursement of warranty payments?

Southwest Company's records indicate that February sales on account were $111,000. The company's management estimates the liability for warranties to be 4.0% of sales. Please provide the journal entry to record warranty expense.

Which of the following is an important internal control over payroll?

Art Parrish, the sole employee of Parrish Sales, has gross salary for March of $4,000. The entire amount is under the OASDI limit of $106,800, and thus subject to FICA. The total amount of FICA that the company pays to the government on Art Parrish's behalf is $612.

Tom's gross pay for the week is $800. Tom's deduction for federal income tax is based on a rate of 18%. Tom has no voluntary deductions. Tom's yearly pay is under the limit for OASDI. What is the amount of Tom's net pay?

Model Maker sold 6,000 one-year prepaid subscriptions to its monthly magazine for $40 per subscription. The subscription year runs from September to August. What is the December 31 adjusting entry for subscription revenue?

Art Parrish, the sole employee of Parrish Sales, has gross salary for March of $4,000. The entire amount is under the OASDI limit of $106,800, and thus subject to FICA. He is also subject to federal income tax at a rate of 18%. Art has a deduction of $320 for health insurance and $80 for United Way. Please provide the second entry in the payroll cycle to record the disbursement of his net pay.

The Statewide Sales Company has gross pay for March of $45,000. Which of the following would be included in the first journal entry in the payroll cycle to record salary expense?

Warranty expense would be included in the liability section of the balance sheet.

Warranties pose an accounting challenge because a company does not know which or how many products will have to be repaired.

Which of the following correctly describes the unearned revenue account?

Which of the following is a control procedure to prevent fictitious persons cashing paychecks?

Art Parrish, the sole employee of Parrish Sales, has gross salary for March of $4,000. The entire amount is under the OASDI limit of $106,800, and thus subject to FICA. He is also subject to federal income tax at a rate of 18%. His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA. The fifth journal entry in the payroll cycle to record the payment by the company of payroll taxes to the government includes which of the following?

Franconia Sales offers warranties on all their electronic goods. Warranty expense is estimated at 2% of sales revenue. In 2014, Franconia had $500,000 of sales. In the same year, Franconia paid out $7,500 of warranty payments. Please provide the journal entry to record the disbursement of warranty payments.