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Exam 9: Accounting for Current Liabilities

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Question 81

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Classify each of the following items

Premises

Responses

Accrued wages payable.

Contingent liability

Payroll taxes payable.

Estimated liability

Lawsuit against the company.

Current liability

Warranty on products sold this year.

Accounts payable.

Vacation benefits.

Property taxes payable.

Income taxes payable.

Unearned revenues.

Debt guarantees.

Premises

Accrued wages payable.

Payroll taxes payable.

Lawsuit against the company.

Warranty on products sold this year.

Accounts payable.

Vacation benefits.

Property taxes payable.

Income taxes payable.

Unearned revenues.

Debt guarantees.

Responses

Contingent liability

Estimated liability

Current liability

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Correct Answer

Premises

Responses

Accrued wages payable.

Payroll taxes payable.

Lawsuit against the company.

Warranty on products sold this year.

Accounts payable.

Vacation benefits.

Property taxes payable.

Income taxes payable.

Unearned revenues.

Debt guarantees.

Premises

Accrued wages payable.

Payroll taxes payable.

Lawsuit against the company.

Warranty on products sold this year.

Accounts payable.

Vacation benefits.

Property taxes payable.

Income taxes payable.

Unearned revenues.

Debt guarantees.

Responses

Question 82

Multiple Choice

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The wage and tax statement is:

A) Form 940
B) Form 941
C) Form 1040
D) Form W-2
E) Form W-4

F) B) and E)
G) A) and B)

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Question 83

Essay

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What are estimated liabilities? Provide at least two examples and explain why they are classified as estimated liabilities.

Identify and discuss the factors involved in withholding federal income taxes from employees' pay.

On June 1, 2013, Martin Company signed a $25,000, 120-day, 6% note payable to cover a past due account payable. This company uses a calendar year to report financial activity. a. What is the total amount of interest to be paid on this note? b. Prepare Martin Company's general journal entry to record the issuance of the note payable, c. Prepare Martin Company's general journal entry to record the payment of the note on September 29, 2013 assuming no adjusting entries have been made since this note was first issued.

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

______________________ is the total compensation an employee earns including wages, salaries, commissions, bonuses, and any compensation earned before deductions such as taxes.

A company performed warranty repair work for a customer that cost $1,000. The journal entry to record the work should be a debit of $1,000 to Warranty Expense and a credit of $1,000 to Estimated Warranty Liability.

The employer should record payroll deductions as:

Companies with many employees often use a special ____________________ account to pay employees.

____________________________ are banks authorized to accept deposits of amounts payable to the federal government, including amounts due for payroll taxes.

A company's employer payroll taxes are 0.8% for federal unemployment taxes, 5.4% for state unemployment taxes, 6.2% for FICA Social Security taxes on earnings up to $106,800 and 1.45% for FICA Medicare taxes on all earnings. Compute the W-2 Wage and Tax Statement information required below for the following employees: $\begin{array}{|l|c|c|}\hline \text { Employee } & \text { Gross Earnings } & \text { Federal Income Taxes Withheld } \\\hline \text { A Barker } & \$ 84,000 & \$ 17,600 \\\hline \text { C. Dirkson } & 52,000 & 8,200 \\\hline\end{array}$

Home Depot had income before interest expense and income taxes of $5,909 million and interest expense of $37 million. Calculate Home Depot's times interest earned ratio.

The Orlando Magic received $6 million cash in advance season ticket sales. Prior to the beginning of the basketball season, these sales are recorded as a credit to unearned season ticket revenue.

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

A company had a fixed interest expense of $6,000, its income before interest expense and any income taxes was $18,000 and its net income was $8,400. The company's times interest earned ratio is equals to

______________ are amounts owed to suppliers for products or services purchased on credit.

If the times interest ratio:

Uncertainties such as natural disasters that could happen in the future:

Uncertainties from the development of new competing products are contingent liabilities.