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Exam 11: Current Liabilities and Payroll Accounting

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Question 51

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Obligations not expected to be paid within the longer of one year or the company's operating cycle are reported as:

A) Current liabilities.
B) Long-term liabilities.
C) Bills.
D) Operating cycle liabilities.
E) Current assets.

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

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Question 52

Multiple Choice

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During the first week of January, an employee works 46 hours. For this company, workers earn 150% of their regular rate for hours in excess of 40 per week. Her pay rate is $16 per hour, and her wages are subject to no deductions other than FICA Social Security, FICA Medicare, and federal income taxes. The tax rate for Social Security is 6.2% of the first $118,500 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 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The employee has $80 in federal income taxes withheld. -What is the amount of this employee's gross pay for the first week of January?

A) $784
B) $1,156
C) $1,004
D) $736
E) $1,104

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

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Question 53

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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 $118,500 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?

Sales Taxes Payable is debited and Cash is credited when companies send sales taxes collected from customers to the government.

Floral Depot's income before interest expense and income taxes was $5,900 million, and interest expense was $38 million. Calculate Floral Depot's times interest earned.

If a company has advance subscription sales totaling $45,000 for the upcoming year when four quarterly journals will mailed to customers, the receipt of cash would be journalized as:

A company's income before interest expense and income taxes is $302,400, and its interest expense is $62,000. Calculate the company's times interest earned ratio.

Contingent liabilities are recorded in the accounts if the future event is ________ and the amount owed can be ________.

A company cannot have a liability if the amount of the obligation is unknown.

The employer should record deductions from employee pay as:

The chief executive officer earns $20,000 per month. As of May 31, her gross pay was $100,000. The tax rate for Social Security is 6.2% of the first $118,500 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 5.4%. 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 June?

Companies with many employees rarely use a special payroll bank account from which to pay employees.

Employees earn vacation pay at the rate of one day per month. During the month of July, 25 employees qualify for one vacation day each. Their average daily wage is $100 per day. What is the amount of vacation benefit expense to be recorded for the month of July?

On May 22, Jarrett Company borrows $7,500 from Fairmont Financing, signing a 90-day, 8%, $7,500 note. -What is the journal entry needed to record the payment of the note by Jarrett Company on the maturity date?

Promissory notes cannot be transferred from party to party because they are nonnegotiable.

A short-term note payable is a written promise to pay a specified amount on a definite future date within one year or the operating cycle, whichever is shorter.

Employers can use a wage bracket withholding table to compute federal income taxes withheld from each employee's gross pay.

The wage bracket withholding table is used to:

An employee earned $37,000 during the year working for an employer when the maximum limit for Social Security was $118,500. The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The employee's annual FICA taxes amount is:

Athena Company provides employee health insurance that costs $5,000 per month. In addition, the company contributes an amount equal to 5% of the employees' $120,000 gross salary to a retirement program. The entry to record the accrued benefits for the month would include a: