Exam 10: Liabilities: Current,installment Notes,and Contingencies

Townson Company had gross wages of $180,000 during the week ended December 10.All earnings are subject to social security tax,while the amount of wages subject to federal and state unemployment taxes was $24,000.Tax rates are as follows: The total amount withheld from employee wages for federal income taxes was $32,000.

Chang Co.issued a $50,000,120-day,discounted note to Guarantee Bank.The discount rate is 6%.Assuming a 360-day year,the cash proceeds to Chang Co.are

Lamar Industries warrants its products for one year.The estimated product warranty expense is 3% of sales.Sales for June were $190,000.In July,a customer received warranty repairs requiring $185 of parts and $50 of labor.

Use the following key (a-d)to identify the proper treatment of each contingent liability. -Event is remote and amount is estimable

The journal entry to record the conversion of a $6,300 accounts payable to a note payable would be ​

The following totals for the month of April were taken from the payroll register of Magnum Company: ​ ​ The entry to record accrual of employer's payroll taxes would include a

Use the following key (a-d)to identify the proper treatment of each contingent liability. -Event is probable and amount is estimable

On July 8,Jones Inc.issued an $80,000,6%,120-day note payable to Miller Company.Assume that the fiscal year of Jones ends July 31.Using a 360-day year,what is the amount of interest expense recognized by Jones in the current fiscal year? When required,round your answer to the nearest dollar.

The payroll register of Seaside Architecture Company indicates $970 of social security and $257 of Medicare tax withheld on total salaries of $16,500 for the period.Federal withholding for the period totaled $4,235.Prepare the journal entry for the period's payroll.

Payroll taxes only include social security taxes and federal unemployment and state unemployment taxes.

Assuming that all wages are subject to federal and state unemployment taxes,the employer's payroll tax expense would be

In order to be a recorded contingent liability,the liability must be possible and easily estimated.

​On January 1,Gemstone Company obtained a $165,000,10-year,7% installment note from Guarantee Bank.The note requires annual payments of $23,492,with the first payment occurring on the last day of the fiscal year.The first payment consists of interest of $11,550 and principal repayment of $11,942.The journal entry to record the payment of the first annual amount due on the note would include a

The proceeds from discounting a $20,000,60-day,note payable at 6% is $20,200.

According to a summary of the payroll of Scotland Company,salaries for the period were $500,000.Federal income tax withheld was $98,000.Also,$15,000 was subject to state (4.2%)and federal (0.8%)unemployment taxes.All earnings are subject to social security tax of 6.0% and Medicare tax of 1.5%. ​

The journal entry a company uses to record fully funded pension rights for its salaried employees at the end of the year is

Martinez Co.borrowed $50,000 on March 1 of the current year by signing a 60-day,9%,interest-bearing note.Assuming a 360-day year,when the note is paid on April 30,the entry to record the payment should include a

​On January 1,Zero Company obtained a $52,000,4-year,6.5% installment note from Regional Bank.The note requires annual payments consisting of principal and interest of $15,179,beginning on December 31 of the current year.The December 31,Year 1 carrying amount in the allocation of periodic payments table for this installment note will be equal to:

The amount borrowed is equal to the face amount of the note on an interest-bearing note payable.

Federal unemployment taxes are paid by the employer and the employee.