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Exam 9: Reporting and Analyzing Current Liabilities

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Question 51

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All of the following statements regarding liabilities are true except:

A) A liability is a probable future payment of assets or services.
B) Unearned future wages to be paid to employees should be recorded as liabilities.
C) For a liability to be reported,it must be a present obligation that results from a past transaction or event,and requires a future payment of assets or services.
D) Information about liabilities is more useful when the balance sheet identifies them as either current or long term.
E) Liabilities can involve uncertainty in whom to pay.

F) C) and D)
G) B) and E)

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Question 52

Multiple Choice

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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) A) and D)
G) A) and B)

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Question 53

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An employee earned $138,500 working for an employer in the current year.The current rate for FICA Social Security is 6.2% payable on earnings up to $127,200 maximum per year and the rate for FICA Medicare 1.45% of all earnings.The employer's total FICA payroll tax for this employee is:

On December 1,Victoria Company signed a 90-day,6% note payable,with a face value of $15,000.What is the journal entry to record the issuance of the note on December 1?

An employee earned $62,500 during the year working for an employer.The FICA tax rate for Social Security is 6.2% of the first $127,200 of employee earnings per calendar year and the FICA tax rate for Medicare is 1.45% of all earnings.The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both unemployment taxes are applied to the first $7,000 of an employee's pay.What is the amount of total unemployment taxes the employee must pay?

What are known current liabilities? Cite at least two examples of known current liabilities.

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

The payroll records of a company provided the following data for the current weekly pay period ended March 12. Assume that the Social Security portion of the FICA taxes is 6.2% on the first $127,200 and the Medicare portion is 1.45% of all wages paid to each employee for this pay period.The federal and state unemployment tax rates are 0.8% and 5.4%,respectively,on the first $7,000 paid to each employee.Calculate the net pay for each employee.

All of the following statements regarding long-term liabilities are true except?

The chief executive officer earns $20,000 per month.As of June 30,her gross pay was $120,000.The tax rate for Social Security is 6.2% of the first $127,200 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings.The current FUTA tax rate is 0.6%,and the SUTA tax rate is 4.4%.Both unemployment taxes are applied to the first $7,000 of an employee's pay.What is the amount of FICA - Medicare withheld from this employee for the month of July?

Trey Morgan is an employee who is paid monthly.For the month of January of the current year,he earned a total of $4,538.The FICA tax for social security is 6.2% of the first $127,200 earned each calendar year,and the FICA tax rate for Medicare is 1.45% of all earnings for both the employee and the employer.The amount of federal income tax withheld from his earnings was $680.70.What is the total amount of taxes withheld from the Trey's earnings?

Accounts payable are:

Triston Vale is paid on a monthly basis.For the month of January of the current year,he earned a total of $5,210.FICA tax for Social Security is 6.2% on the first $127,200 of earnings each calendar year and the FICA tax for Medicare is 1.45% of all earnings.The FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both unemployment taxes are applied to the first $7,000 of an employee's pay.The amount of Federal Income Tax withheld from his earnings was $885.70.What is the amount of the employer's payroll taxes expenses for this employee?

The correct times interest earned computation is:

On November 1,Alan Company signed a 120-day,8% note payable,with a face value of $9,000.What is the adjusting entry for the accrued interest at December 31 on the note? (Use 360 days a year.)

Payroll is an example of a contingent liability for the employer.

A company has advance subscription sales totaling $45,000 for the upcoming year when four quarterly journals will mailed to customers.When the company mails the first quarterly journal to customers,it should record:

Explain how to calculate times interest earned and how it is used to analyze a company's risk.

On November 1,Casey's Snowboards signed a $12,000,90-day,5% note payable to cover a past due account payable. a.What amount of interest expense on this note should Casey's Snowboards report on year-end December 31? b.Prepare Casey's journal entry to record the issuance of the note payable. c.Prepare Casey's adjusting journal entry at the end of the year d.Prepare Casey's journal entry to record the payment of the note on February 1 of the following year.

The deferred income tax liability: