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Exam 9: Reporting and Analyzing Current Liabilities

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Question 1

Multiple Choice

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The wage bracket withholding table is used to:

A) Compute social security withholding.
B) Compute Medicare withholding.
C) Compute federal income tax withholding.
D) Prepare the W-4.
E) Compute unemployment taxes.

F) B) and D)
G) All of the above

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C

Question 2

Multiple Choice

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The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both taxes are applied to the first $7,000 of an employee's pay.Assume that an employee earned total wages of $9,900.What is the amount of total unemployment taxes the employer must pay on this employee's wages?

A) $336.00.
B) $420.00.
C) $534.60.
D) $594.00.
E) $0.00.

F) All of the above
G) A) and E)

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Question 3

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Employer payroll taxes are an added employee ________ beyond the wages and salaries earned by the employees.

During August,Boxer Company sells $356,000 in merchandise that has a one year warranty.Experience shows that warranty expenses average about 5% of the selling price.The warranty liability account has a credit balance of $12,800 before adjustment.Customers returned merchandise for warranty repairs during the month that used $9,400 in parts for repairs.The entry to record the estimated warranty expense for the month is:

On January 31,Ransom Company's payroll register showed that its employers earned $30,320 of office salaries and $82,750 of sales salaries.Withholdings from the employees' salaries include FICA Social Security taxes as the rate of 6.2%,FICA Medicare taxes at the rate of 1.45%,$16,960 of federal income taxes,$3,350 of medical insurance deductions (which represents 50% of the total cost of the employee medical insurance),and $4,210 of 401(k)retirement contribution deductions.Ransom Company pays the other 50% of the employee insurance cost and matches the employee 401(k)contributions.Several employees earned more than $7,000 for the period which reduced salaries subject to unemployment to $104,000.No employees exceeded the FICA-Social Security taxable wage base. 1.Prepare the journal entry to record Ransom Company's January 31 payroll expenses and liabilities. 2.Prepare the journal entry to record Ransom Company's employer payroll taxes resulting from the January 31 payroll.Ransom's merit rating reduces its state unemployment (SUTA)to 4% of the first $7,000 paid each employee.The federal unemployment tax (FUTA)rate is 0.6%. 3.Prepare the journal entry to record Ransom's additional employee expenses.

When the number of withholding allowances claimed on Form W-4 increases,the amount of income tax withheld decreases.

During the first week of January,an employee works 46 hours.For this company,workers earn 150% of their regular rate for hours in excess of 40 per week.Her pay rate is $16 per hour,and her wages are subject to no deductions other than FICA Social Security,FICA Medicare,and federal income taxes.The tax rate for Social Security is 6.2% of the first $127,200 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings.The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both unemployment taxes are applied to the first $7,000 of an employee's pay.The employee has $80 in federal income taxes withheld.What is the amount of this employee's gross pay for the first week of January?

An employee earnings report is a cumulative record of each employee's hours worked,gross earnings,deductions,and net pay.

An employee earned $155,000 working for an employer in the current year.The current rate for FICA Social Security is 6.2% payable on earnings up to $127,200 maximum per year and the rate for FICA Medicare 1.45% of all earnings.The employee's total FICA payroll tax is:

Amounts received in advance from customers for future products or services:

Sales Taxes Payable is credited when companies collect taxes from customers.

When a company is obligated for sales taxes payable,it is reported as a(n) :

On December 1,Victoria Company signed a 90-day,6% note payable,with a face value of $15,000.What is the adjusting entry to record the accrued interest on December 31?

On November 1,Alan Company signed a 120-day,8% note payable,with a face value of $9,000.What is the maturity value of the note on March 1? (Use 360 days a year.)

Short-term notes payable:

All expected future payments are liabilities.

A ________ shows the pay period dates,hours worked,gross pay,deductions,and net pay of each employee for every pay period.

Obligations not expected to be paid within the longer of one year or the company's operating cycle are reported as:

Contingent liabilities are recorded in the accounts if the future event is ________ and the amount owed can be ________.

A company's fixed interest expense is $8,000,its income before interest expense and income taxes is $32,000.Its net income is $9,600.The company's times interest earned ratio equals: