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Exam 11: Current Liabilities and Payroll

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Question 61

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Proper payroll accounting methods are important for a business for all of the following reasons except

A) good employee morale requires timely and accurate payroll payments
B) payroll is subject to various federal and state regulations
C) to help a business with cash flow problems by delayed payments of payroll taxes to federal and state agencies
D) payroll and related payroll taxes have a significant effect on the net income of most businesses

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Question 62

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According to a summary of the payroll of Scotland Company,$450,000 was subject to the 6.0% social security tax and $500,000 was subject to the 1.5% Medicare tax.Federal income tax withheld was $98,000.Also,$15,000 was subject to state (4.2%)and federal (0.8%)unemployment taxes.​

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Question 63

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Match each of the following items with the term or phrase (a-g) that best describes it. Terms or phrases may be used more than once. -Current assets/Current liabilities

Lamar Industries warrants its products for one year.The estimated product warranty expense is 3% of sales.Sales for June were $190,000.In July,a customer received warranty repairs requiring $185 of parts and $50 of labor.

An employee earns $40 per hour and 1.5 times that rate for all hours in excess of 40 hours per week.Assume that the employee worked 60 hours during the week and that the gross pay prior to the current week totaled $58,000.Assume further that the social security tax rate was 6.0%,the Medicare tax rate was 1.5%,and the federal income tax to be withheld was $614.​ (a) Determine the gross pay for the week. (b) Determine the net pay for the week.

The current portion of long-term debt should

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

Federal unemployment compensation taxes that are collected by the federal government are not paid directly to the unemployed but are allocated among the states for use in state programs.

Which of the following is not a determinant in calculating federal income taxes withheld from an individual's pay?

Assuming a 360-day year,when a $50,000,90-day,9% interest-bearing note payable matures,the total payment will be

The borrower issues a note payable to a creditor.

According to a summary of the payroll of Sinclair Company,$505,000 was subject to the 6.0% social security tax and $545,000 was subject to the 1.5% Medicare tax.Also,$10,000 was subject to state and federal unemployment taxes.

An employee receives an hourly rate of $45,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,48; federal income tax withheld,$950; social security tax rate,6.0%; 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.Calculate the employer's payroll tax expense if: (a)This is the first payroll of the year and the employee has no cumulative earnings for the year to date. (b)The employee's cumulative earnings for the year prior to this week equal $6,200. (c)The employee's cumulative earnings for the year prior to this week equal $118,700.

Match each payroll item that follows to the one item (a-f) that best describes its characteristics. -Federal income tax

During its first year of operations,a company granted its employees vacation privileges and pension rights estimated at a cost of $21,500 and $15,000,respectively.The vacations are expected to be taken in the next year,and the pension rights are expected to be paid in the future 5-30 years.What is the total cost of vacation pay and pension rights to be recognized in the first year?

The summary of the payroll for the monthly pay period ending July 15 indicated the following:​ Journalize the entries to record (a)the payroll and (b)the employer's payroll tax expense for the month.The state unemployment tax rate is 3.1%,and the federal unemployment tax rate is 0.8%.Only $25,000 of salaries are subject to unemployment taxes.

Young Company has the following assets and liabilities:​​ Determine the quick ratio (rounded to one decimal point) .

Kelly Howard has the following transactions.Prepare the journal entries.

The journal entry to record the conversion of a $6,300 account payable to a note payable would be​

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