Question 1

Employers must keep individual earnings reports for each employee.

Accepted Answer

A) True 
 B)False  True

Question 2

All of the following statements regarding uncertainty in liabilities are true except:

Accepted Answer

A) Liabilities can involve uncertainty in whom to pay. 
B) A company can create a liability with a known amount even when the holder of the note may not be known until the maturity date. 
C) A company can have an obligation of a known amount to a known creditor but not know when it must be paid. 
D) A company only records liabilities when it knows whom to pay, when to pay, and how much to pay. 
E) A company can be aware of an obligation but not know how much will be required to settle it. 
A) Liabilities can involve uncertainty in whom to pay. 
B) A company can create a liability with a known amount even when the holder of the note may not be known until the maturity date. 
C) A company can have an obligation of a known amount to a known creditor but not know when it must be paid. 
D) A company only records liabilities when it knows whom to pay, when to pay, and how much to pay. 
E) A company can be aware of an obligation but not know how much will be required to settle it. D

Question 3

A corporation has a $40,000 credit balance in the Income Tax Payable account. Period end information shows that the actual liability is $47,000. The company should record an entry to debit Income Tax Expense for $7,000 and credit Income Taxes Payable for $7,000.

Accepted Answer

A) True 
 B)False  True

Question 4

Contingent liabilities are recorded in the accounts if the future event is _______________ and the amount owed can be _______________.

Accepted Answer

probable;

Question 5

Debt guarantees are:

Accepted Answer

A) Never disclosed in the financial statements. 
B) Considered to be contingent liabilities. 
C) A bad business practice. 
D) Recorded as liabilities even though it is highly unlikely that the original debtor will default. 
E) Considered to be current liabilities. 
A) Never disclosed in the financial statements. 
B) Considered to be contingent liabilities. 
C) A bad business practice. 
D) Recorded as liabilities even though it is highly unlikely that the original debtor will default. 
E) Considered to be current liabilities.

Question 6

On January 31, Ransom Company's payroll register showed that its employers earned $30,320 of office salaries and $82,750 of sales salaries. Withholdings from the employees' salaries include FICA Social Security taxes at the rate of 6.2% on the first $118,500 of earnings per calendar year, FICA Medicare taxes at the rate of 1.45% on all earnings, $16,960 of federal income taxes, $3,350 of medical insurance deductions (which represents 50% of the total cost of the employee medical insurance), and $4,210 of 401(k) retirement contribution deductions. Ransom Company pays the other 50% of the employee insurance cost and matches the employee 401(k) contributions. Several employees earned more than $7,000 for the period which reduced salaries subject to unemployment to $104,000. No employees exceeded the FICA-Social Security taxable wage base.
1. Prepare the journal entry to record Ransom Company's January 31 payroll expenses and liabilities.
2. Prepare the journal entry to record Ransom Company's employer payroll taxes resulting from the January 31 payroll. Ransom's merit rating reduces its state unemployment (SUTA) to 4% of the first $7,000 paid each employee. The federal unemployment tax (FUTA) rate is 0.6%.
3. Prepare the journal entry to record Ransom's additional employee expenses.

Accepted Answer

The answer of On January 31, Ransom Company's payroll register...

Question 7

A company has income before interest expense and income taxes of $186,000, and its interest expense is $55,000. Calculate the company's times interest earned ratio.

Accepted Answer

The answer of A company has income before interest expense...

Question 8

The Form W-2 must be given to employees before January 31 following the year covered by the Form W-2.

Accepted Answer

A) True 
 B)False

Question 9

On June 1, Jasper Company signed a $25,000, 120-day, 6% note payable to cover a past due account payable.
a. What is the total amount of interest to be paid on this note?
b. Prepare Jasper Company's general journal entry to record the issuance of the note payable.
c. Prepare Jasper Company's general journal entry to record the payment of the note on September 29.

Accepted Answer

The answer of On June 1, Jasper Company signed a...

Question 10

Accounting for contingent liabilities covers three possibilities: (1) The future event is probable and the amount cannot be reasonably estimated; (2) The future event is remote or unlikely to recur; (3) The likelihood of the liability to occur is impossible.

Accepted Answer

A) True 
 B)False

Question 11

_________________ are probable future payments of assets or services that a company is presently obligated to make as a result of past transactions or events.

Accepted Answer

The answer of _________________ are probable future payments of assets...

Question 12

The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both taxes are applied to the first $7,000 of an employee's pay. Assume that an employee earned total wages of $9,900. What is the amount of total unemployment taxes the employer must pay on this employee's wages?

Accepted Answer

A) $336.00. 
B) $420.00. 
C) $534.60. 
D) $594.00. 
E) $0.00. 
A) $336.00. 
B) $420.00. 
C) $534.60. 
D) $594.00. 
E) $0.00.

Question 13

FUTA requires employers to pay a federal unemployment tax on all salary or wages paid to each employee.

Accepted Answer

A) True 
 B)False

Question 14

During June, Vixen Fur Company sells $850,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 3% of the selling price. Customers returned $14,000 of merchandise for warranty replacement during the month. The entry to settle the customer warranties is:

Accepted Answer

A) Debit Warranty Expense $11,500; credit Estimated Warranty Liability $11,500. 
B) Debit Estimated Warranty Liability $25,500; credit Warranty Expense $25,500. 
C) Debit Warranty Expense $14,000; credit Estimated Warranty Liability $14,000. 
D) Debit Estimated Warranty Liability $11,500; credit Merchandise Inventory $11,500. 
E) Debit Estimated Warranty Liability $14,000; credit Merchandise Inventory $14,000. 
A) Debit Warranty Expense $11,500; credit Estimated Warranty Liability $11,500. 
B) Debit Estimated Warranty Liability $25,500; credit Warranty Expense $25,500. 
C) Debit Warranty Expense $14,000; credit Estimated Warranty Liability $14,000. 
D) Debit Estimated Warranty Liability $11,500; credit Merchandise Inventory $11,500. 
E) Debit Estimated Warranty Liability $14,000; credit Merchandise Inventory $14,000.

Question 15

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. Alan made the appropriate year-end accrual on December 31. What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made?

Accepted Answer

A) Debit Notes Payable $9,000; debit Interest Payable $120; credit Cash $9,120. 
B) Debit Cash $9,240; credit Notes Payable $9,240. 
C) Debit Notes Payable $9,240; credit Interest Payable $120; credit Interest Expense $120; credit Cash $9,000. 
D) Debit Notes Payable $9,000; debit Interest Payable $120; debit Interest Expense $120; credit Cash $9,240. 
E) Debit Notes Payable $9,000; debit Interest Expense $240; credit Cash $9,240. 
A) Debit Notes Payable $9,000; debit Interest Payable $120; credit Cash $9,120. 
B) Debit Cash $9,240; credit Notes Payable $9,240. 
C) Debit Notes Payable $9,240; credit Interest Payable $120; credit Interest Expense $120; credit Cash $9,000. 
D) Debit Notes Payable $9,000; debit Interest Payable $120; debit Interest Expense $120; credit Cash $9,240. 
E) Debit Notes Payable $9,000; debit Interest Expense $240; credit Cash $9,240.

Question 16

Loong Industries sells materials on March 16 for $12,000 cash, subject to 8% sales tax. The cost of the materials sold is $5,700. The revenue portion of the transaction is recorded as:

Accepted Answer

A) Debit Cash $12,000; credit Sales Taxes Payable $960; credit Sales $11,040. 
B) Debit Accounts Receivable $12,960; credit Sales $12,000; credit Sales Taxes Payable $960. 
C) Debit Cash $12,960; credit Sales $12,000; credit Sales Taxes Payable $960. 
D) Debit Sales $12,960; credit Cash $12,000; credit Sales Taxes Payable $960. 
E) Debit Cash $12,960; credit Sales $12,960. 
A) Debit Cash $12,000; credit Sales Taxes Payable $960; credit Sales $11,040. 
B) Debit Accounts Receivable $12,960; credit Sales $12,000; credit Sales Taxes Payable $960. 
C) Debit Cash $12,960; credit Sales $12,000; credit Sales Taxes Payable $960. 
D) Debit Sales $12,960; credit Cash $12,000; credit Sales Taxes Payable $960. 
E) Debit Cash $12,960; credit Sales $12,960.

Question 17

A payroll register does not include:

Accepted Answer

A) Pay period dates. 
B) Hours worked. 
C) Gross pay and net pay. 
D) Deductions. 
E) Employer tax expenses. 
A) Pay period dates. 
B) Hours worked. 
C) Gross pay and net pay. 
D) Deductions. 
E) Employer tax expenses.

Question 18

Loong Industries collected $17,350 of sales tax on sales to customers during the month of March. When Loong remits these collections to the government in early April, the correct journal entry will be:

Accepted Answer

A) Debit Sales $17,350; credit Cash $17,350. 
B) Debit Accounts Payable $17,350; credit Cash $17,350. 
C) Debit Sales $17,350; credit Sales Taxes Payable $17,350. 
D) Debit Sales Taxes Payable $17,350; credit Sales $17,350. 
E) Debit Sales Taxes Payable $17,350; credit Cash $17,350. 
A) Debit Sales $17,350; credit Cash $17,350. 
B) Debit Accounts Payable $17,350; credit Cash $17,350. 
C) Debit Sales $17,350; credit Sales Taxes Payable $17,350. 
D) Debit Sales Taxes Payable $17,350; credit Sales $17,350. 
E) Debit Sales Taxes Payable $17,350; credit Cash $17,350.

Question 19

All of the following are true of known liabilities except:

Accepted Answer

A) Include accounts payable, notes payable, and payroll. 
B) Are obligations set by agreements, contracts, or laws. 
C) Are measurable. 
D) Are definitely determinable. 
E) Are potential obligations that depend on some future event occurring. 
A) Include accounts payable, notes payable, and payroll. 
B) Are obligations set by agreements, contracts, or laws. 
C) Are measurable. 
D) Are definitely determinable. 
E) Are potential obligations that depend on some future event occurring.

Question 20

An employee earned $4,600 in February working for an employer. The FICA tax rate for Social Security is 6.2% of the first $118,500 earned during each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The employee has $644 in federal income taxes withheld and has voluntary deductions for health insurance of $50 and contributes 10% of gross pay to a retirement plan each month. The employer pays the $200 remainder of the health insurance premium and an equal amount of contribution to the retirement fund. What is the amount of net pay for the employee for the month of February?

Accepted Answer

A) $3,094.10 
B) $3,496.00 
C) $3,604.10 
D) $3,446.00 
E) $2,634.10 
A) $3,094.10 
B) $3,496.00 
C) $3,604.10 
D) $3,446.00 
E) $2,634.10

Employers must keep individual earnings reports for each employee.

All of the following statements regarding uncertainty in liabilities are true except:

A corporation has a $40,000 credit balance in the Income Tax Payable account. Period end information shows that the actual liability is $47,000. The company should record an entry to debit Income Tax Expense for $7,000 and credit Income Taxes Payable for $7,000.

Contingent liabilities are recorded in the accounts if the future event is _ and the amount owed can be _.

Debt guarantees are:

A company has income before interest expense and income taxes of $186,000, and its interest expense is $55,000. Calculate the company's times interest earned ratio.

The Form W-2 must be given to employees before January 31 following the year covered by the Form W-2.

Accounting for contingent liabilities covers three possibilities: (1) The future event is probable and the amount cannot be reasonably estimated; (2) The future event is remote or unlikely to recur; (3) The likelihood of the liability to occur is impossible.

_________________ are probable future payments of assets or services that a company is presently obligated to make as a result of past transactions or events.

The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both taxes are applied to the first $7,000 of an employee's pay. Assume that an employee earned total wages of $9,900. What is the amount of total unemployment taxes the employer must pay on this employee's wages?

FUTA requires employers to pay a federal unemployment tax on all salary or wages paid to each employee.

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. Alan made the appropriate year-end accrual on December 31. What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made?

Loong Industries sells materials on March 16 for $12,000 cash, subject to 8% sales tax. The cost of the materials sold is $5,700. The revenue portion of the transaction is recorded as:

A payroll register does not include:

Loong Industries collected $17,350 of sales tax on sales to customers during the month of March. When Loong remits these collections to the government in early April, the correct journal entry will be:

All of the following are true of known liabilities except:

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters

Exam 9: Reporting and Analyzing Current Liabilities

Employers must keep individual earnings reports for each employee.

All of the following statements regarding uncertainty in liabilities are true except:

A corporation has a $40,000 credit balance in the Income Tax Payable account. Period end information shows that the actual liability is $47,000. The company should record an entry to debit Income Tax Expense for $7,000 and credit Income Taxes Payable for $7,000.

Contingent liabilities are recorded in the accounts if the future event is _______________ and the amount owed can be _______________.

Debt guarantees are:

A company has income before interest expense and income taxes of $186,000, and its interest expense is $55,000. Calculate the company's times interest earned ratio.

The Form W-2 must be given to employees before January 31 following the year covered by the Form W-2.

Accounting for contingent liabilities covers three possibilities: (1) The future event is probable and the amount cannot be reasonably estimated; (2) The future event is remote or unlikely to recur; (3) The likelihood of the liability to occur is impossible.

_________________ are probable future payments of assets or services that a company is presently obligated to make as a result of past transactions or events.

The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both taxes are applied to the first $7,000 of an employee's pay. Assume that an employee earned total wages of $9,900. What is the amount of total unemployment taxes the employer must pay on this employee's wages?

FUTA requires employers to pay a federal unemployment tax on all salary or wages paid to each employee.

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. Alan made the appropriate year-end accrual on December 31. What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made?

Loong Industries sells materials on March 16 for $12,000 cash, subject to 8% sales tax. The cost of the materials sold is $5,700. The revenue portion of the transaction is recorded as:

A payroll register does not include:

Loong Industries collected $17,350 of sales tax on sales to customers during the month of March. When Loong remits these collections to the government in early April, the correct journal entry will be:

All of the following are true of known liabilities except:

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters

Contingent liabilities are recorded in the accounts if the future event is _ and the amount owed can be _.