Exam 11: Current Liabilities and Payroll

The times-interest-earned ratios of four companies are given below: Forge Corp. 8.9 Fellow, Inc. 9.2 Stacy Corp. 6.7 Bennett, Inc. 13.5 Which of the above companies has the highest debt-paying ability?

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

Which of the following is paid by the employer only?

Which of the following is required to be deducted from employees' paychecks?

A journal entry is prepared to reclassify the current portion of a note payable.

A contingent liability is a potential, rather than an actual liability, because it depends on a future event.

Southwest, Inc. records indicate that January sales on account were $109,000. The company's management estimates warranty expense to be 3.6% of sales. Prepare the journal entry to record warranty expense. Omit explanation.

When a business records accrued interest expense on a note payable, ________.

Cash received in advance of providing goods or performing services is recorded as ________.

The employer is required to directly deposit the employee's take-home pay into the employee's bank account.

State unemployment compensation tax (SUTA) is paid by the employer and is not deducted from an employee's gross earnings.

A pension plan is a plan that provides benefits to retired employees.

Tan's gross pay for the week is $1500. His year-to-date pay is under the limit for OASDI. Assume that the rate for state and federal unemployment compensation taxes is 6% and that Tan's year-to-date pay has previously exceeded the $7000 cap. What is the amount of state and federal unemployment tax that his employer must record as payroll tax expense and pay to the federal and state governments?

The old age, survivors, and disability insurance component of FICA tax is imposed on the entire amount of an individual employee's earnings.

Regarding gross and net pay, which of the following statements is correct?

Amounts owed for products or services purchased on account are called ________.

Analyze the following independent situations. Required: For each situation, state the likelihood of a future event and state how the contingency will be reported. A) Company A estimates it will have to pay $85,000 in warranty repairs next year. B) Company B is being sued by a customer. Company B's attorneys feel that this is a frivolous lawsuit and there is very little chance that the customer will win. C) Company C co-signed a note payable for Company D. Company D is having serious financial problems and it is reasonably possible that Company C will have to pay the note. D) Company E is being sued for a patent infringement. Company E's attorney feels that Company E will be found liable for damages caused by the patent infringement. However, the attorney states it is not possible to estimate the amount of the award.

Rock Music, Inc. signed a 200-day, 5%, $5,000 note on April 1, 2018, and this was the only note payable for the company. Calculate the times-interest-earned ratio of Rock Music, Inc. if its earnings before interest and taxes for the year ending December 31, 2018, is $4,300. Round all calculations to two decimal places. (Use a 360-day year.)

Stone's gross pay for the week is $1600. Stone's year-to-date pay is under the limit for OASDI. Assume that the rate for state and federal unemployment compensation taxes is 6% and that Stone's year-to-date pay has not yet exceeded the $7000 cap. What is the amount of state and federal unemployment tax that his employer must record as payroll tax expense and pay to the federal and state governments?

Venus Corp. sold goods, with a selling price of $17,221, for cash. The state sales tax rate is 8%. What amount is credited to the Sales Revenue account? (Round calculations to the nearest dollar.)