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Exam 11: Current Liabilities and Payroll

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Question 61

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Steve's gross pay for the week is $980.His yearly pay is under the limit for OASDI.Assume that the rate for state and federal unemployment compensation taxes is 6.2%,and that Steve's pay year-to-date has previously exceeded the $7,000 cap.His yearly pay is under the limit for OASDI.What is the total amount of payroll taxes that Steve's employer must record as payroll tax expenses? (Do not round your intermediate calculations.Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%.)

A) $60.76
B) $41.16
C) $94.53
D) $74.97

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Question 62

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Panache Inc.withholds $720 from Steve's paycheck for federal income tax.This amount is part of the company's payroll tax expense.

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Question 63

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Barter Inc.sold goods for $875,500 on account.The company operates in a state that imposes a 6% sales tax.Which of the following would be the amount of the sales tax payable to the state?

A certain contingent liability was evaluated at year-end,and considered to have a remote possibility of becoming an actual liability.If the accountant decided not to report it on the balance sheet or in the notes to the financial statement,what effect would this have on the financial reporting of the company?

Jupiter Services sells a service plan for commercial computer maintenance.The price is $1,650 per year,paid in advance.On October 1,2013,the company sells a service plan to a new customer for cash.Provide the journal entry to record this transaction on October 1.

On July 1,2013,Ferrero Inc.purchased merchandise inventory for $350,000 by signing a note payable.The note is for 6 months and bears interest at a rate of 8%.Provide the journal entry for this transaction,using a perpetual inventory system.

For the month of September,Countrywide Sales Inc.recorded gross pay of $58,750.The net pay for the month amounted to $56,000.The company decided to pay the salaries on October 5.Which of the following is the journal entry for the payment of salaries?

Lawrence,an employee of Light Inc.,has gross salary for March of $4,000.The entire amount is under the OASDI limit of $110,100,and thus subject to FICA.His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA. -Which of the following is a part of journal entry in the payroll cycle to record the employer's payroll taxes?

A certain contingent liability was evaluated at year-end; the company felt it was probable that it would become an actual liability,and the amount could be reasonably estimated.If the accountant decided to report it on the balance sheet,this could be considered a violation of generally accepted accounting principles.

Saran Digital Inc.starts the year with $2,500 in its Estimated Warranty Payable account.During the year,there were $210,000 of sales and $4,500 of warranty repair payments.Saran Digital estimates warranty expense at 2% of sales.The journal entry to record this will include a debit to Warranty Expense for ________.

The journal entry in the payroll cycle to record the employer's payroll tax expense will include a debit to Employee Income Taxes Payable.

Berkley's gross pay for the month is $5,400.His deduction for federal income tax is based on a rate of 18%.He has no voluntary deductions.His yearly pay is under the limit for OASDI.What is Berkley's net pay? (Assume a FICA-OASDI Tax of 4.2% and FICA-Medicare Tax of 1.45%.)

On September 1,2013,Ferrero Inc.borrowed $125,000 by signing a note payable.The note is for 9 months and bears interest at a rate of 7.2%.Provide the journal entry to accrue interest expense at the end of 2013.

Jumbo Sales Corporation offers warranties on all their electronic goods.Warranty expense is estimated at 3% of sales revenue.In 2013,the company had $595,000 of sales.In the same year,Jumbo paid out $8,500 of warranty payments.Which of the following is the entry needed to record the disbursement of warranty payments?

Where does unearned revenue to be earned in six months appear on the balance sheet?

The Social Security system is funded by contributions from both the employer and employee.

Steve is an employee of Panache Inc.Panache pays a portion of his health insurance premium,and also contributes to a retirement plan in his name.The company's share of the health insurance premium is $600,and the company's contribution to the retirement plan is $780.The journal entry in the payroll cycle to record the employee benefits to be paid by the company should include a debit to Employee Health Insurance Payable for $1,380.

Which of the following is pay over and above base salary,usually paid for exceptional performance?

Ragas Inc.sold goods with a selling price of $50,000 in the year 2013 and estimated 4% warranty expense for the year.Customers complained of defects and goods with a cost of $1,500 had to be replaced.Which of the following is the correct journal entry for honoring the warranties with goods?

Pluto Corp.had sold goods with a selling price of $8,421 for cash.The state sales tax rate is 8%.What amount will be credited to the Sales Revenue account?