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Exam 11: Current Liabilities and Payroll Accounting

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Question 71

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A note payable must always be paid before an account payable.

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Question 72

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A contingent liability is a liability that may occur if some future event takes place.

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Question 73

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Blalock Company sells products with a 2-year warranty. Past experience indicates that 2% of the units sold will be returned during the warranty period for repairs. The average cost of repairs under warranty is estimated to be $75 per unit. During 2014 7000 units were sold at an average price of $400. During the year repairs were made on 55 units at a cost of $3600. Instructions Prepare journal entries to record the repairs made under warranty and estimated warranty expense for the year.

The journal entry to record the payroll for a period will include a credit to Salaries and Wages Payable for the gross

An employer's estimated cost for post-retirement benefits for its employees should be

Assume that the payroll records of Klein Oil Company provided the following information for the weekly payroll ended November 30 2017. Additional information: All employees are paid overtime at time and a half for hours worked in excess of 40 per week. The FICA tax rate is 7.65% for the first $117000 of each employee's annual earnings. The employer pays unemployment taxes of 6.2% (5.4% for state and .8% for federal) on the first $7000 of each employee's annual earnings. Instructions (a) Prepare the payroll register for the pay period. (b) Prepare general journal entries to record the payroll and payroll taxes.

Which one of the following payroll taxes does not result in a payroll tax expense for the employer?

Sonoma Company has the following selected accounts after posting adjusting entries: $\begin{array}{lr}\text { Accounts Payable } & \$ 6,000 \\\text { Notes Payable, 3-month } & 40,000 \\\text { Accumulated Depreciation-Equipment } & 14,000 \\\text { Notes Payable, 5-year, 6\% } & 80,000 \\\text { Payroll Tax Expense } & 4,000 \\\text { Interest Payable } & 3,000 \\\text { Mortgage Payable } & 120,000 \\\text { Sales Taxes Payable } & 38,000\end{array}$ Instructions Prepare the current liability section of Sonoma Company's balance sheet assuming $16000 of the mortgage is payable next year.

Post-retirement benefits consist of payments by employers to retired employees for health care life insurance and pensions.

By January 31 following the end of a calendar year an employer is required to provide each employee with a(n)

The treasurer's department is responsible for

The current ratio is

An employee's net pay consists of gross pay less mandatory and voluntary payroll deductions. Identify the mandatory payroll deductions and give two or three examples of common voluntary deductions. Are these deductions recognized as payroll expenses by the employer? What type of payroll expenses does the employer incur related to having a payroll?

Prepare the necessary journal entries for the following transactions: (a) On September 1 Draper Company borrowed $180000 from Dixion County Bank on a 6-month 8% note. (b) On December 31 Draper Company accrued interest (assume adjusting entries are only made at the end of the year).

Koppernaes Company has total proceeds (before segregation of sales taxes) from sales of $9540. If the sales tax is 6% the amount to be credited to the account Sales Revenue is:

Back Cove Yacht Company billed its customers a total of $1575000 for the month of November. The total includes a 5% state sales tax. Instructions (a) Determine the proper amount of revenue to report for the month. (b) Prepare the general journal entry to record the revenue and related liabilities for the month.

Lulzbot.com sells 6000 units of its product for $500 each during the year ending December 31 2017. The selling price includes a one-year warranty on parts. It is expected that 3% of the units will be defective and that repair costs will average $50 per unit. In the year of sale warranty contracts are honored on 120 units for a total cost of $6000. What amount will be reported on Lulzbot.com's balance sheet as Warranty Liability on December 31 2017?

The interest charged on a $100000 note payable at the rate of 6% on a 2-month note would be

The total compensation earned by an employee is called

On October 1 Eli's Carpet Service borrows $125000 from First National Bank on a 3-month $125000 8% note. The entry by Eli's Carpet Service to record payment of the note and accrued interest on January a. $\begin{array}{lrr} \text {Notes Payable } &127,500\\ \text { Cash } &&127,500\\\end{array}$ b. $\begin{array}{lrr} \text { Notes Payable } &125,000\\ \text { Interest Payable} &2,500\\ \text { Cash} &&127,500\end{array}$ c. $\begin{array}{lrr} \text {Notes Payable } &125,000\\ \text { Interest Payable} &10,000\\ \text { Cash } &&135,000\end{array}$ d. $\begin{array}{lrr} \text { Notes Payable} &125,000\\ \text { Interest Expense } &2,500\\ \text { Cash } &&127,500\end{array}$