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Exam 9: Current Liabilities

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Question 61

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Employers must pay FICA taxes that are equal to the amount being withheld from their employees.

A) True
B) False

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Question 62

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A company sells leaf blowers for $170 each.Each unit has a three-year warranty that covers replacement of defective parts.It is estimated that 4% of all leaf blowers sold will be returned under the warranty at an average cost of $30 each.During October,the company sold 400,000 leaf blowers; 800 leaf blowers were serviced under the warranty during October at a total cost of $25,000.The balance in the Estimated Warranty Liability account on October 1 was $12,500.What is the company's warranty expense for the month of October?

A) $24,000
B) $25,000
C) $37,500
D) $467,500
E) $480,000

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

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Question 63

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

The Form W-2 must be given to employees before January 31 following the year covered by this report.

All expected future payments are liabilities.

Cooper Company borrows $785,100 cash on November 1,2013,by signing a 120-day,8% note.What amount of interest expense should Cooper recognize in 2013?

The difference between the amount borrowed and the amount repaid is referred to as _______________.

On December 1,Martin Company signed a $5,000,3-month,6% note payable,with the principle plus interest due on March 1 of the following year.What amount of interest expense is accrued at December 31 on the note?

Employers must keep certain payroll records,including individual earnings reports for each employee.

The FICA tax for Social Security is 6.2% and the FICA tax for Medicare is 1.45%.An employee's share of both FICA taxes was $3,901.50.Given that this employee did not exceed the FICA earnings limitation,compute gross pay.

Promissory notes are nonnegotiable,which means they cannot be transferred from party to party.

The times interest earned ratio is calculated by dividing income before interest expense and income taxes by interest expense.

Amounts received in advance from customers for future products or services:

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

Obligations due to be paid within one year or within the company's operating cycle,whichever is longer,are:

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

FUTA taxes are:

If a company paid $820,000 in bonuses,and net income before bonus was $3,850,000,what was the bonus percentage offered to the employees during this year?

Classify each of the following items as a current liability,long-term liability,or not a liability:

A company sells personal computers,with an included two-year warranty for $2,300 each.During the current year,the company sells 400 computers.On the basis of past experience,the warranty costs are estimated to be $250 per computer.The actual warranty costs (paid in cash)by the company during the current year were $65,000.Prepare general journal entries to record the (a)estimated warranty expense and (b)warranty repair costs during current year.