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Exam 10: Current Liabilities and Payroll

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Question 51

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The Young Company has the following assets and liabilities: $\begin{array} { | l | l | } \hline \text { ASSETS } & \\\hline \text { Cash } & \\\hline \text { Accounts receivable } & 15,000 \\\hline \text { Inventory } & 30,000 \\\hline \text { Equipment } & 50,000 \\\hline & \\\hline \text { LIABILITIES } & \\\hline \text { Current portion of long-term debt } & 10,000 \\\hline \text { Accounts payable } & 2,000 \\\hline \text { Long-term debt } & 25,000 \\\hline\end{array}$ Determine the quick ratio rounded to one decimal point) .

A) 6.7
B) 13.0
C) 4.2
D) 3.5

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Question 52

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Journalize the following entries on the books of the borrower and creditor. Label accordingly. Assume a 360-day year is used for interest calculations.)Jun. 1 Regis Co. purchased merchandise on account from Winthrop Co., $60,000, terms n/30. Jun. 30 Regis Co. issued a 60-day, 5% note for $60,000 on account. Aug. 29 Regis Co. paid the amount due.

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Regis Co. Borrower)June 1 Merchandise In...

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Question 53

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Assuming a 360-day year, the interest charged by the bank, at the rate of 6%, on a 90­day, discounted note payable of $100,000 is

Match the following terms or phrases in a-g) with the explanations in 1-8. Terms or phrases may be used more than once. -Current assets/Current liabilities

Match the following terms or phrases in a-g) with the explanations in 1-8. Terms or phrases may be used more than once. -Measures the "instant" debt­paying ability of a company

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?

Most employers are required to withhold federal unemployment taxes from employee earnings.

Use the following information and calculate the quick ratio for Davis Company and for Bender Inc. a) Calculate the quick ratio for each company. b) Comment on which one is more able to meet current liabilities.

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

Medicare taxes are paid by both the employee and the employer.

Scott Company sells merchandise with a one-year warranty. Sales consisted of 2,500 units in Year 1 and 2,000 units in Year 2. It is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in Year 1 and 70% in Year 2 for the Year 1 sales. Similarly, 30% of repairs will be made in Year 2 and 70% in Year 3 for the Year 2 sales. In the Year 3 income statement, how much of the warranty expense shown will be due to Year 1 sales?

Martin Jackson receives an hourly wage rate of $30, with time and a half for all hours worked in excess of 40 hours during a week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $350; social security tax rate, 6.0%; and Medicare tax rate, 1.5%. What is the net amount to be paid to Jackson?

Which of the following taxes are employers required to withhold from employees?

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

An employee's take-home pay is equal to gross pay less all voluntary deductions.

The journal entry a company uses to record pension rights that have not been funded for its salaried employees at the end of the year is

Internal controls for cash payments apply to payrolls.

Depending upon when an unfunded pension liability is to be paid, it will be classified on the balance sheet as either a long-term or a current liability.

The borrower issues a note payable to a creditor.

Chang Co. issued a $50,000, 120-day, discounted note to Guarantee Bank. The discount rate is 6%. Assuming a 360-day year, the cash proceeds to Chang Co. are