Exam 11: Current Liabilities and Payroll

Isabelle's gross pay for the week is $850.Her deduction for federal income tax is based on a rate of 19%.She has voluntary deductions of $135.Her yearly pay is under the limit for OASDI.What is the amount of FICA-Medicare Tax deducted from her pay? (Assume a FICA-OASDI Tax of 4.2% and FICA-Medicare Tax of 1.45%.)

Employer FICA is a tax expense that is paid out by the employer and recorded as a payroll tax expense.

Firewood Inc.signed a three-year note payable for $45,000 at 7% annual interest.What is the interest expense for 2013 if the note was signed on August 1,2013?

A certain contingent liability was evaluated at year-end,and considered to have a remote possibility of becoming an actual liability.If the accountant decided not to report it on the balance sheet or in the notes to the financial statements,this could be considered a violation of generally accepted accounting principles.

Amounts owed for products or services,due within one year,are current liabilities.

Steve,an employee of Panache Inc.,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 employer's payroll tax expense includes a credit to FICA-Medicare Taxes Payable for $145.(Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45 %.)

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

On December 31,2014,Ferrero Inc.borrowed $500,000 by signing a note payable.The note is for 5 years and bears interest at the rate of 8%.The note is payable in 5 yearly installments of $100,000 plus interest due at the end of every year beginning on December 31,2015. -What amount represents the current portion of Long-term Notes Payable at December 31,2014?

A contingent liability that has a remote possibility of becoming an actual loss is not included in a note to the financial statements.

________ is pay stated as a percentage of a sale amount.

A corporation has been sued for product failures allegedly resulting in injuries to the individuals bringing the lawsuit.The company's lawyers believe it is more than remote,but less than probable,that the lawsuit will result in an actual liability.Which of the following actions should be taken by the company's management?

Which of the following is a characteristic of a current liability?

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

Which of the following is a major control risk in the payroll area?

A restaurant has been sued because a customer claims to have found a bug in her chili.The company's lawyers believe there is only a remote possibility that the lawsuit will result in an actual liability.Which of the following actions should be taken by the company's management?

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

Paramount Inc.decided to reward its employees with a bonus of 7% on annual net income,after deducting the bonus.The company reported net income of $513,600 before the calculation of the bonus.Provide the journal entry to accrue employee bonus expense.

Employer FICA tax is a tax paid by the employer and is added to the employee's pay.

Lawrence,an employee of Light Inc.,has gross salary for March of $4,000.The entire amount is under the OASDI limit of $110,100,and thus subject to FICA.His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA.Provide the journal entry to record the employer's payroll taxes.(Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%.)

The times-interest-earned ratios of Benin Inc.are 20.56 and 7.35 for the years 2013 and 2014,respectively.Which of the following can be the possible reason for such a change?