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Exam 9: Reporting and Analyzing Current Liabilities

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Question 91

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On September 15,SportsWorld borrowed $75,000 cash from FirstBank on a 12%,60-day note payable. a. Prepare SportsWorld's general journal entry to record the issuance of the note payable b. Prepare SportsWorld's general journal entry to record the payment of the note at maturity.

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a.
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Question 92

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FUTA taxes are:

A) Social Security taxes
B) Medicare taxes
C) Employee income taxes
D) Unemployment taxes
E) Employee deductions

F) C) and D)
G) A) and C)

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Question 93

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__________ allowances are items that reduce the amount of federal income taxes owed by the individual.

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

Define liabilities and explain the differences between current and long-term liabilities.

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

Advance ticket sales totaling $6,000,000 cash would be recognized as follows:

The rate for FICA-social security is 6.2% and the rate for FICA-Medicare is 1.45%.Calculate the total amount of FICA withholding for an employee whose pay is $2,400 and is entirely subject to these FICA taxes.

A company sold $12,000 worth of trampolines with an extended warranty.It estimates that 2% of these sales will result in warranty work.The company should:

Uncertainties such as natural disasters:

A company's income before interest expense and income taxes is $302,400 and its interest expense is $72,000.Calculate the company's times interest earned ratio.

Match each of the following terms with the appropriate definitions.

The difference between the amount received from issuing a note payable and the amount repaid is referred to as:

FUTA is the abbreviation for social security taxes.

In the accounting records of a defendant,lawsuits:

On December 1,2010 Gates Company borrowed $45,000 cash from FirstBank on a 90-day,9% note payable. a. Prepare Gate's general journal entry to record the issuance of the note payable b. Prepare Gate's general journal entry to record the accrued interest due at December 31, 2010 c. Prepare Gate's general journal entry to record the payment of the note on March 1, 2013.

Experience shows that when times interest earned falls below 1.5 to 2.0 and remains at that level or lower for several time periods,the default rate on liabilities increases sharply.

On October 10,2010,Printfast Company sells a commercial printer for $2,350 with a one year warranty that covers parts.Warranty expense is project to be 4% of sales.On February 28,2011,the printer requires repairs.The cost of the parts for the repair is $80 and Printfast pays their technician $150 to perform the repair.What is the warranty expense at the end of 2011?

A high merit rating means that an employer has high employee turnover or seasonal hiring.

Metro Express has 5 sales employees,each of whom earns $4,000 per month and is paid on the last working day of the month.Each employee's wages are subject to FICA social security taxes of 6.2% and Medicare taxes of 1.45% on all wages.Withholding for each employee also includes federal income tax of 16% and monthly medical insurance premiums of $110 for each employee. a. Prepare the general journal entry to accrue the monthly sales salaries expense at January 31 b. The employer payroll taxes for Metro Express include FICA taxes, federal unemployment taxes of 0.8% of the first $7,000 paid each employee and state unemployment taxes of 4.0% of the first $7,000 paid to each employee. Prepare the journal entry to record the employer's payroll taxes at January 31 for Metro Express. (Assume that none of the employees has reached the unemployment limit of $7,000.)