Exam 11: Current Liabilities and Payroll

Jane Services sells a service plan for commercial computer maintenance. The price is $1,650 per year, paid in advance. On October 1, 2013, Jane sells a service plan to a new customer for cash. Provide the journal entry to record this transaction on October 1.

Which of the following correctly describes the accounting treatment for interest payable?

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 $110,100, 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. Provide the Provide the journal entry to record salaries expense and payroll withholdings. (Assume a FICA-OASDI Tax of 4.2% and FICA-Medicare Tax of 1.45%.)

Which of the following is pay over and above base salary, usually paid for exceptional performance?

On September 1, 2013, Ferrero Inc. borrowed $125,000 by signing a note payable. The note is for 9 months and bears interest at a rate of 7.2%. Provide the journal entry to accrue interest expense at the end of 2013.

Berkley's gross pay for this month is $8,750. His gross pay year-to-date, prior to this month totaled $102,500. Berkley's rate for federal income tax is 20%. His voluntary deductions total $950. What is the amount of Berkley's net pay? (Assume an OASDI rate of 4.2%, applicable on the first $110,100 earnings, and a Medicare rate of 1.45%, applicable on all earnings.)

The Social Security system is funded by contributions from both the employer and employee.

Ben Inc. recently signed a $350,000, six-month note on August 22, 2013. The interest rate is 6.5%. How much total interest will be due on the note at maturity?

________ is a schedule that summarizes the earnings, withholdings, and net pay for each employee.

On July 1, 2013, Ferrero Inc. purchased merchandise inventory for $350,000 by signing a note payable. The note is for 6 months and bears interest at a rate of 8%. Provide the journal entry for this transaction, using a perpetual inventory system.

Taurus's gross pay for the week is $980. His yearly pay is under the limit for OASDI. Assume that the rate for state and federal unemployment compensation taxes is 6.2%, and that Taurus's pay year-to-date has not yet exceeded the $7,000 cap. His yearly pay is under the limit for OASDI. How much is the total amount of payroll taxes that his employer must record as payroll tax expenses? (Do not round your intermediate calculations. Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%.)

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 $110,100, 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. Which of the following is included in the entry in the payroll cycle to record the liability of payroll withholding deductions?

Which of the following deductions is paid by both the employer and employee?

Gem Corp. had sales of $3,500. The state sales tax rate is 8.2%. Sales are for cash. What amount will be debited to the Cash account?

Victoria Sales made total cash sales in February of $666,000, and they are subject to 7.5% sales tax. Please provide the summary entry to record sales revenues and sales tax payable.

Art Panache, the sole employee of Panache Sales, has gross salary for March of $5,000. The entire amount is under the OASDI limit of $110,100, and thus subject to FICA. He is also subject to federal income tax at a rate of 20%. His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA. The journal entry in the payroll cycle to record the employer's payroll tax expense includes a credit to FICA-OASDI Taxes Payable for $310. (Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%.)

It is mandatory for both the employer and employee to pay:

Art Panache is the sole employee of Panache Sales. His employer pays a portion of his health insurance premium, and also contributes to a retirement plan in his name. The company's share of the health insurance premium is $600, and the company's contribution to the retirement plan is $780. The journal entry in the payroll cycle to record the employee benefits to be paid by the company should include a debit to Employee Health Insurance Payable for $1,380.

The information related to interest expense of Stereo Music is given below: Net income \ 255,000 Income tax expense 102,000 Interest expense 65,000 Based on the above data, which of the following is the interest coverage ratio?

Income taxes are withheld from each employee's paycheck.