Question 1

Fast Bikes Company offers warranties on all their bikes.They estimate warranty expense at 3.5% of sales.At the beginning of 2018,the Estimated Warranty Payable account had a credit balance of $1900.During the year,Fast Bikes had $296,000 in sales and had to pay out $5900 in warranty payments.At the end of the year,what is the ending balance in the Estimated Warranty Payable accounts?

Accepted Answer

A)  $6360
B)  $7800
C)  $8460
D)  $10,360 A

Question 2

The information related to Jazz Music Company is given below:
  Calculate the times-interest-earned ratio for each year.Round all calculations to two decimal places.

Accepted Answer

The answer of The information related to Jazz Music Company...

Question 3

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

Accepted Answer

A)  Unearned Revenue
B)  Accrued Revenue
C)  Service Revenue
D)  Uncollected Revenue A

Question 4

If the likelihood of a future event is reasonably possible,how should the company report the contingency?

Accepted Answer

The answer of If the likelihood of a future event...

Question 5

Which of the following columns is typically included in a payroll register?

Accepted Answer

A)  Direct Labor Hours Worked
B)  Warranties Payable
C)  Current Period Earnings
D)  Sales Tax

Question 6

When a company co-signs a note payable for another entity,a current liability must be recorded.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following would be included in the journal entry to record the payment of sales tax payable?

Accepted Answer

A)  a debit to Sales Tax Payable
B)  a credit to Sales Tax Expense
C)  a debit to Sales Tax Expense
D)  a credit to Sales Tax Payable

Question 8

Medicare taxes are a required column in a payroll register.

Accepted Answer

A) True 
 B)False

Question 9

What is a contingent liability? Provide two examples of contingencies.

Accepted Answer

The answer of What is a contingent liability? Provide two...

Question 10

Mars Company had cash sales of $10,000.The state sales tax rate is 10.8%.What amount is debited to the Cash account?

Accepted Answer

A)  $10,000
B)  $11,080
C)  $1080
D)  $1000

Question 11

A contingency was evaluated at year-end.Management felt it was probable that this would become an actual liability and the amount could be reasonably estimated.If this is reported on the balance sheet,it could be considered a violation of generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 12

Tony's gross pay for the month is $2700.Tony's deduction for federal income tax is based on a rate of 21%.Tom has no voluntary deductions.Tony's year-to-date pay is under the limit for OASDI.What is the amount of FICA tax withheld from Tony's pay? (Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%.Do not round any intermediate calculations,and round your final answer to the nearest cent. )

Accepted Answer

A)  $773.55
B)  $206.55
C)  $567.00
D)  $387.45

Question 13

________ is a pay amount stated at an hourly rate.

Accepted Answer

A)  Salary
B)  Wage
C)  Commission
D)  Bonus

Question 14

When determining how businesses record or do not record contingent liabilities,which is NOT one of the three likelihoods that that are considered?

Accepted Answer

A)  remote
B)  reasonably probable
C)  probable
D)  reasonably possible

Question 15

Sales Tax Payable is usually calculated as a percentage of the amount of the sale.

Accepted Answer

A) True 
 B)False

Question 16

Because a company usually does not know the amount of the year-end bonus at year-end,no liability is recorded.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following liabilities is created when a company receives cash for services to be provided in the future?

Accepted Answer

A)  Unearned Revenue
B)  Accrued Liability
C)  Accounts Payable
D)  Estimated Warranty Payable

Question 18

Norwood Company signs a $11,000,8.5%,six-month note dated November 1,2018.The interest expense recorded for this note in 2018 will be ________.(Do not round any intermediate calculations,and round your final answer to the nearest dollar. )

Accepted Answer

A)  $935
B)  $156
C)  $468
D)  $312

Question 19

Which of the following deductions is paid by both the employer and employee?

Accepted Answer

A)  federal income taxes
B)  federal unemployment taxes
C)  FICA taxes
D)  SUTA taxes

Question 20

The expense for warranty costs is recorded in the period ________.

Accepted Answer

A)  when the product is sold
B)  when the product is repaired or replaced
C)  when cash is paid to repair or replace the product
D)  when cash is collected from the sale of the product

Exam 11: Current Liabilities and Payroll

The information related to Jazz Music Company is given below: Calculate the times-interest-earned ratio for each year.Round all calculations to two decimal places.

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

If the likelihood of a future event is reasonably possible,how should the company report the contingency?

Which of the following columns is typically included in a payroll register?

When a company co-signs a note payable for another entity,a current liability must be recorded.

Which of the following would be included in the journal entry to record the payment of sales tax payable?

Medicare taxes are a required column in a payroll register.

What is a contingent liability? Provide two examples of contingencies.

Mars Company had cash sales of $10,000.The state sales tax rate is 10.8%.What amount is debited to the Cash account?

A contingency was evaluated at year-end.Management felt it was probable that this would become an actual liability and the amount could be reasonably estimated.If this is reported on the balance sheet,it could be considered a violation of generally accepted accounting principles.

________ is a pay amount stated at an hourly rate.

When determining how businesses record or do not record contingent liabilities,which is NOT one of the three likelihoods that that are considered?

Sales Tax Payable is usually calculated as a percentage of the amount of the sale.

Because a company usually does not know the amount of the year-end bonus at year-end,no liability is recorded.

Which of the following liabilities is created when a company receives cash for services to be provided in the future?

Norwood Company signs a $11,000,8.5%,six-month note dated November 1,2018.The interest expense recorded for this note in 2018 will be ________.(Do not round any intermediate calculations,and round your final answer to the nearest dollar. )

Which of the following deductions is paid by both the employer and employee?

The expense for warranty costs is recorded in the period ________.