Exam 8: Current Liabilities and Fair Value Accounting

If the net present value of a proposed investment is negative,it means that the investment should not be made.

Future value refers to an amount received or paid now at a given rate of interest that is equivalent to another amount received or paid sometime in the future.

Lee Provo is paid $8 per hour,plus time-and-one-half for hours over 40 for a given week.During the week of January 21,Provo worked 46 hours.Social security taxes are 6.2 percent,Medicare taxes are 1.45 percent,$50 is withheld for federal income taxes,$12 is withheld for state income taxes,and $15 is withheld for medical insurance.In addition,Provo's employer must pay social security taxes of 6.2 percent,Medicare taxes of 1.45 percent,state unemployment taxes of 5.4 percent,and federal unemployment taxes of .8 percent.Calculate (a)Provo's gross earnings,(b)Provo's take-home pay,(c)the employer's payroll taxes expense,and (d)the total cost of employing Provo for the week.Round all amounts to the nearest penny.

The entry that includes a debit to Payroll Taxes and Benefits Expense also includes credits to Federal Unemployment Tax Payable and State Unemployment Tax Payable.

Recording estimated product warranty expense in the year of the sale best follows which of the following accounting principles?

Prepare journal entries without explanations for the following transactions involving notes payable for Gomez Company,whose fiscal year ends June 30. June 20 Pad a trade account payable with a 90 -day, 9 percent \ 60,000 note. Interest is in addition to the face value. 30 Made end-of-year adjusting entry to accrue interest expense for the note. 30 Made end-of-year closing entry pertaining to interest expense. Sept. 18 Paid amount due on note, plus interest.

A company wishes to make annual contributions into a fund intended to retire $400,000 in debt five years from now.The amount to contribute each year equals $400,000

Failure to record a liability probably will

Dividends Payable is an example of a(n)

Which of the following descriptions would not fit the definition of a liability?

Total payroll for a given week is $12,000.If 70 percent of the company's employees typically qualify to receive two weeks' paid vacation per year,assuming 50 working weeks,the entry to record the estimated liability for vacation pay for the week is:

Ronald Company has current assets of $115,000 and current liabilities of $75,000 of which accounts payable are $65,000.Arnold's cost of goods sold is $420,000,its merchandise inventory increased by $20,000,and accounts payable were $45,000 the prior year.Calculate Ronald's working capital,payables turnover,and days' payable.

Which of the following businesses most likely would have a large Unearned Revenue account balance at all times?

A liability rarely is established for product warranties because of uncertainty as to the amount of the liability.

Which of the following phrases is not descriptive of an ordinary annuity?

Which of the following most likely is an estimated liability?

Promotional costs,such as coupons and rebates,should be recorded as an expense with a related liability.

Use this information to answer the following question. Gross payroll \ 16,000 Federal income taxes withheld \ 1,800 Social security and Medicare rate 7.65\% Federal unemployment tax rate .8\% State unemployment tax rate 5.4\% The entry to record the payroll taxes expense would include a credit to

A company receives $180 for a sale,of which $10 is for sales tax.The journal entry to record the sale is:

Use this information to answer the following question. The following totals for the month of November were taken from the payroll register of Levine Company: Salaries expense \1 2,000 Social security and Medicare taxes withheld 550 Income taxes withheld 2,500 Medical insurance deductions 250 Life insurance deductions 200 Salaries subiect to federal and state unemployment taxes of 6.2 percent 4,000 The entry to record the payment of net payroll would include a