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Exam 10: Current Liabilities and Payroll

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Question 1

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During September, Excom sold 100 radios for $50 each. Each radio cost Excom $30 to purchase, and carried a two-year warranty. If 5% of the goods sold typically need to be replaced over the warranty period and one is actually replaced during September, for what amount in September would Excom debit Product Warranty Expense?

A) $50
B) $150
C) $30
D) $120

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

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Question 2

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Internal controls for cash payments also apply to payrolls.

A) True
B) False

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Question 3

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While separation of duties may play a strong role in the internal control of inventory, it is not significant in controlling payroll.

The journal entry a company uses to record fully funded pension rights for its salaried employees at the end of the year is

Use the following information to answer the following questions. Assuming no employees are subject to ceilings for their earnings, Jensen Company has the following information for the pay period of January 15 - 31, 20xx. Assuming that all wages are subject to federal and state unemployment taxes, the Payroll Taxes Expense would be recorded as:

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 7.0% (on earnings up to $100,000), the Medicare tax rate was 1.5%, and the federal income tax to be withheld was $614. Required: (1) Determine the gross pay for the week. (2) Determine the net pay for the week.

An employee receives an hourly rate of $27, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $350; cumulative earnings for year prior to current week, $99,700; social security tax rate, 6.0% on maximum of $100,000; and Medicare tax rate, 1.5% on all earnings. What is the net amount to be paid to the employee?

A business issued a 120-day, 6% note for $10,000 to a creditor on account. The company uses a 360-day year for interest calculations. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including interest.

Assuming no employees are subject to ceilings for their earnings, Moore Company has the following information for the pay period of December 15 - 31, 20xx. Salaries Payable would be recorded for

When a borrower receives the face amount of a discounted note less discount, this amount is known as:

In a defined benefits plan, the employer bears the investment risks in funding a future retirement income benefit.

Which of the following are included in the employer's payroll taxes?

Which of the following would be used to compute the federal income taxes to be withheld from an employee's earnings?

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.) Required:

In order to be a recorded contingent liability, the liability must be possible and easily estimated.

The proceeds from discounting a $20,000, 60-day, note payable at 6% is $20,200.

All long-term liabilities eventually become current liabilities.

The total earnings of an employee for a payroll period is referred to as

During its first year of operations, a company granted employees vacation privileges and pension rights estimated at a cost of $21,500 and $15,000. 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?

A pension plan which promises employees a fixed annual pension benefit, based on years of service and compensation, is called a(n)