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Exam 11: Current Liabilities and Payroll

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Question 71

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An employee receives an hourly rate of $15, with time and a half for all hours worked in excess of 40 during the week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $120; cumulative earnings for the year prior to this week, $5,500; social security tax rate, 6.0%; and Medicare tax rate, 1.5%; state unemployment compensation tax, 3.4% on the first $7,000; federal unemployment compensation tax, 0.8% on the first $7,000. Prepare the journal entries to record the salaries expense and the employer payroll tax expense.

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Question 72

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The total earnings of an employee for a payroll period is referred to as

A) take-home pay
B) pay net of taxes
C) net pay
D) gross pay

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Question 73

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The following totals for the month of February were taken from the payroll register of Arcon Company:? $\begin{array}{l}\begin{array}{lr}\text { Salaries expense } & \$ 13,000 \\\text { Social security and Medicare taxes withheld } & 975 \\\text { Income taxes withheld } & 2,600 \\\text { Retirement savings } & 500 \\\text { Salaries subject to federal and state unemployment } & 4,000\end{array}\\\text { taxes of } 6.2 \%\end{array}$ (a) How much is the total payroll tax expense for Arcon Company for this payroll? (b) Assume that the monthly salaries expense remains the same for the entire year and no employees are hired or fired during that time. Based on what you learned in Chapter 11 about payroll taxes, do you expect the total payroll tax expense to stay the same every month? Explain.

An employee's take-home pay is equal to gross pay less all voluntary deductions.

All long-term liabilities eventually become current liabilities.

Journalize the following entries on the books of the borrower and creditor. Label accordingly. (Assume a 360-day year is used for interest calculations.)? June 1 James Co. purchased merchandise on account from O'Leary Co., $90,000, terms n/30. The cost of merchandise sold was $54,000. 30James Co. issued a 60-day, 5% note for $90,000 on account.Aug. 29James Co. paid the amount due.?

Scott Company sells merchandise with a one-year warranty. Sales consisted of 2,500 units in Year 1 and 2,000 units in Year 2. It is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in Year 1 and 70% in Year 2 for the Year 1 sales. Similarly, 30% of repairs will be made in Year 2 and 70% in Year 3 for the Year 2 sales. In the Year 3 income statement, how much of the warranty expense shown will be due to Year 1 sales?

Federal unemployment compensation tax becomes an employer's liability at the time the employee is paid.

Sadie White receives an hourly wage rate of $30, with time-and-a-half pay for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 48; federal income tax withheld, $300; social security tax rate, 6.0%; and Medicare tax rate, 1.5%. What is the net amount to be paid to White?

The payroll register of Seaside Architecture Company indicates $870 of social security and $217 of Medicare tax withheld on total salaries of $14,500 for the period. Assume earnings subject to state and federal unemployment compensation taxes are $5,250 at the federal rate of 0.8% and state rate of 5.4%. Prepare the journal entry to record the payroll tax expense for the period.

Which of the following taxes would be deducted in determining an employee's net pay?

Most employers use payroll checks drawn on a special bank account for paying the payroll.

The amount of money a borrower receives from the lender is called the discount rate.

Use the following key (a-d) to identify the proper treatment of each contingent liability. -Event is remote and amount is not estimable

On October 1, Ramos Co. signed a $90,000, 60-day discounted note at the bank. The discount rate was 6%, and the note was paid on November 30. (Assume a 360-day year is used for interest calculations.) (a)Journalize the entries for October 1 and November 30. (b)Assume that Ramos Co. signed a 6% note. Journalize the entries for October 1 and November 30.

The borrower issues a note payable to a creditor.

Anderson Co. issued a $50,000, 60-day, discounted note to National Bank. The discount rate is 6%. At maturity, assuming a 360-day year, the borrower will pay

On August 1, Batson Company issued a 60-day note with a face amount of $140,000 to Jergens Company for merchandise inventory. (Assume a 360-day year is used for interest calculations.) a. Determine the proceeds of the note assuming the note carries an interest rate of 6%. b. Determine the proceeds of the note assuming the note is discounted at 6%.

Which of the following forms is typically given to employees at the end of the calendar year so that employees can file their individual income tax forms?

Match each payroll item that follows to the one item (a-f) that best describes its characteristics. -FICA-Medicare