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Exam 10: Current Liabilities and Payroll

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Question 51

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On June 8, Alton Co. issued an $80,000, 6%, 120-day note payable on an overdue account payable to Seller Co. Assume that the fiscal year of Alton Co. ends June 30. Which of the following relationships is true?

A) Alton is the creditor and credits Accounts Receivable
B) Seller is the creditor and debits Accounts Receivable
C) Seller is the borrower and credits Accounts Payable
D) Alton is the borrower and debits Accounts Payable

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

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Question 52

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Amounts withheld from each employee for Social Security and Medicare varies by state.

A) True
B) False

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Question 53

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An employee receives an hourly rate of $25, 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 the employee?

Excel Products Inc. pays its employees semimonthly. The summary of the payroll for December 31, 2012 indicated the following: For the year ended 2012, $40,000 of the December 31 payroll is subject to social security tax of 6%; $120,000 is subject to Medicare tax of 1.5%; $10,000 is subject to state unemployment tax of 4.3% and federal unemployment tax of 0.8%. As of January 1, 2013 all of the $120,000 is subject to all payroll taxes. Present the journal entries for payroll tax expense if the employees are paid (a) December 31 of the current year, (b) January 2 of the following year.

A business borrowed $40,000 on March 1 of the current year by signing a 30-day, 9% interest bearing note. When the note is paid on March 31, the entry to record the payment should include a

List five internal controls that relate directly to payroll.

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

The journal entry a company uses to record the issuance of an interest-bearing note for the purpose of borrowing funds for the business is

Darius Company has the following information for the pay period of January 15 - 31, 20xx. Assuming no employees are subject to ceilings for their earnings, calculate Salaries Payable and Employer Payroll Taxes Payable.

The journal entry a company uses to record the issuance of a discounted note for the purpose of borrowing funds for the business is

The employee earnings record would contain which column that the payroll register would probably not contain?

The payroll register of Seaside Architecture Company indicates $870 of Social Security and $217 of Medicare tax withheld on total salaries of $14,500 for the period. Assume earnings subject to state and federal unemployment compensation taxes are $5,250. at the federal rate of 0.8% and state rate of 5.4%. Provide the journal entry to record the payroll tax expense for the period.

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

The following information is for employee Ella Dodd for the week ended March 15. Total hours worked: 48 Rate: $15 per hour, with double time for all hours in excess of 40 Federal income tax withheld: $200 United Fund deduction: $50 Cumulative earnings prior to current week: $6,400 Tax rates: Social security: 6% on maximum earnings of $100,000. Medicare tax: 1.5% on all earnings. State unemployment: 3.4% on maximum earnings of $7,000; on employer Federal unemployment: 0.8% on maximum earnings of $7,000; on employer

The summary of the payroll for the monthly pay period ending July 15 indicated the following: $\begin{array}{ll}\$ 125,000 & \text { Saless salaries } \\32,300 & \text { Federal income tax withheld } \\35,000 & \text { Office salaries } \\7,370 & \text { Medical insurance withheld } \\10,200 & \text { Social security tax withheld } \\2,550 & \text { Medicare tax withheld }\end{array}$ 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.

The discount on a note payable is charged to an account that has a normal credit balance.

Assuming a 360-day year, when a $40,000, 90-day, 9% interest-bearing note payable matures, total payment will amount to:

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

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?

Each year there is a ceiling for the amount that is subject to all of the following except