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Exam 10: Current Liabilities and Payroll

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Question 1

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Townson Company had gross wages of $200,000 during the week ended December 10.The amount of wages subject to social security tax was $180,000,while the amount of wages subject to federal and state unemployment taxes was $24,000.Tax rates are as follows: $\begin{array}{lccc} \text { Social security } & 6.0 \%\\ \text { Medicare } & 1.5 \%\\ \text { State unemployment } & 5.3 \%\\ \text {Federal unemployment } & 0.8 \%\\\end{array}$ The total amount withheld from employee wages for federal income taxes was $32,000. a- Journalize the entry to record the payroll for the week of December 10. b- Journalize the entry to record the payroll tax expense incurred for the week of December 10.

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FICA tax is a payroll tax that is paid only by employers.

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Federal income taxes are subject to a maximum amount per employee per year.

An unfunded pension liability is reported on the balance sheet as

On June 8,Williams Company issued an $80,000,5%,120-day note payable to Brown Industries.Assuming a 360- day year,what is the maturity value of the note?

Based on the following data,what is the quick ratio,rounded to one decimal point?

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 cost of a product warranty should be included as an expense in the

An aid in internal control over payrolls that indicates employee attendance is

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

Which of the following is the most desirable quick ratio?

Assuming no employees are subject to ceilings for their earnings, Harris Company has the following information for the pay period of January 15–31. -Assuming that all wages are subject to federal and state unemployment taxes,the employer's payroll tax expense would be

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

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

Notes payable may be issued to creditors to satisfy previously created accounts payable.

A borrower has two alternatives for a loan: a issue a $480,000,60-day,8% note or 2 issue a $480,000,60-day note that the creditor discounts at 8%.Assume a 360-day year is used for interest calculations. a Calculate the amount of the interest expense for each option. b Determine the proceeds received by the borrower in each situation.

Hall Company sells merchandise with a one-year warranty.In the current year,sales consisted of 4,500 units.It is estimated that warranty repairs will average $10 per unit sold,and 30% of the repairs will be made in the current year and 70% in the next year.In the current year's income statement,Hall should show warranty expense of

Which is not a determinate in calculating federal income taxes withheld from an individual's pay?

A pension plan that requires the employer to make annual pension contributions,with no promise to employees regarding future pension payments,is termed

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.