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Exam 10: Current Liabilities and Payroll

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Question 51

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The following totals for the month of June were taken from the payroll register of Young Company: $\begin{array}{lr}\text { Salaries expense } & \$ 15,000 \\\text { Social security and Medicare taxes withheld } & 1,125 \\\text { Income taxes withheld } & 3,000 \\\text { Retirement savings } & 500 \\\text { Salaries subject to federal and state } & \\\text { unemployment taxes of } 6.2 \text { percent } & 4,000\end{array}$ The entry to record the accrual of employer's payroll taxes would include a debit to

A) Payroll Tax Expense for $2,498
B) Social Security and Medicare Tax Payable for $2,250
C) Payroll Tax Expense for $1,373
D) Payroll Tax Expense for $1,125

E) C) and D)
F) None of the above

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Question 52

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Current liabilities are due

A) but not receivable for more than one year
B) but not payable for more than one year
C) and receivable within one year
D) and payable within one year

E) A) and B)
F) C) and D)

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Question 53

Multiple Choice

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Chang Co.issued a $50,000,120-day,discounted note to Guarantee Bank.The discount rate is 6%.Assuming a 360-day year,the cash proceeds to Chang Co.are

Hadley Industries warrants its products for one year.The estimated product warranty expense is 4% of sales.Assume that sales were $210,000 for June.In July,a customer received warranty repairs requiring $205 of parts and $75 of labor. a. Journalize the adjusting entry required at June 30,the end of the first month of the current year,to record the estimated product warranty expense. b. Journalize the entry to record the warranty work provided in July.

Which of the following forms is typically given to employees at the end of the calendar year so that employees can file their individual income tax forms?

On January 5,Thomas Company,a calendar-year company,issued $1,000,000 of notes payable,of which $250,000 is due on January 1 each of the next four years.The proper balance sheet presentation on December 31 is

Which of the following will have no effect on an employee's take-home pay?

Employers are required to compute and report payroll taxes on a calendar-year basis,even if a different fiscal year is used for financial reporting and income tax purposes.

An interest-beating note is a loan in which the lender deducts interest from the amount loaned before the money is advanced to the borrower.

Martinez Co.borrowed $50,000 on March 1 of the current year by signing a 60­day,9%,interest-bearing note.Assuming a 360-day year,when the note is paid on April 30,the entry to record the payment should include a

181. For Company A and Company B: a Calculate the quick ratio for each company. b Comment on which one is more able to meet current liabilities.

The amount borrowed is equal to the face amount of the note on an interest bearing note payable.

The journal entry to record the payment of an interest-bearing note is

Use the following information and calculate the quick ratio for Davis Company and for Bender Inc. a Calculate the quick ratio for each company. b Comment on which one is more able to meet current liabilities.

Most employers use payroll checks drawn on a special bank account for paying the payroll.

The amount of federal income taxes withheld from an employee's gross pay is recorded as an

For a current liability to exist,the liability must be due usually within a year and must be paid out of current assets.

The current portion of long-term debt should

For proper matching of revenues and expenses,the estimated cost of fringe benefits must be recognized as an expense of the period during which the employee earns the benefits.

Payroll taxes are based on the employee's net pay.