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Exam 9: Current Liabilities

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Question 81

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On December 1,2013,Gates Company borrowed $45,000 cash from First Bank on a 90-day,9% note payable.Gates is a calendar year company a.Prepare Gate's general journal entry to record the issuance of the note payable. b.Prepare Gate's general journal entry to record the accrued interest due at December 31,2013. c.Prepare Gate's general journal entry to record the payment of the note on March 1,2014. Assume no other entries related to this note were made in 2014.

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a.
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Question 82

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______________________ is the total compensation an employee earns including wages,salaries,commissions,bonuses,and any compensation earned before deductions such as taxes.

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Question 83

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An employee earned $47,000 during the year working for an employer.The FICA tax for social security is 6.2%,and the FICA tax for Medicare is 1.45%.The employee's share of FICA taxes is:

Match each of the following terms with the appropriate definitions:

Define liabilities and explain the differences between current and long-term liabilities.

The current FUTA tax rate is 0.8% and the SUTA tax rate is 5.4%.Both taxes are applied to the first $7,000 of an employee's pay.Assume that an employee earned $8,900.What is the amount of total unemployment taxes the employer must pay on this employee's wages?

Employees earn vacation pay at the rate of one day per month.During 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 for the month of July?

FUTA is the abbreviation for social security taxes.

Match each of the following terms with the appropriate definitions:

Mission Company has three employees: $\begin{array}{lrr}&\text { Gross Pay through July }&\text { Gross Pay for August }\\\text { Smith } & \$ 3,200 & \$ 1,000 \\ \text { Cain } & 25,800 & 3,500 \\ \text { Clark } & 94,600 & 13,100\end{array}$ $\text { The company is subject to the following taxes: }$ $\begin{array} { l c l } \text { Tax } & \text { Rate } & \text { Applied to } \\ \text { FICA-Social Security } & \mathbf { 6 . 2 0 \% } & \text { First } \$ 106,800 \\ \text { FICA-Medicare } & 1.45 & \text { All grosspay } \\ \text { FUTA } & \mathbf { .8 0 } & \text { First } \$ 7,000 \\ \text { SUTA } & 5.40 & \text { First } \$ 7,000 \end{array}$ NEWLINE NEWINE What is the amount that Mission Company will withhold from Clark's August gross pay?

Unearned revenue is another name for sales.

The times interest earned computation is:

Federal depository banks are authorized to accept deposits of amounts payable to the federal government.

A company sold $12,000 worth of trampolines with an extended warranty.It estimates that 2% of these sales will result in warranty work.The company should:

A company's income before interest expense and income taxes was $225,000 in 2013 and $200,000 in 2014.Its interest expense was $45,000 for both years.Calculate the company's times interest earned ratio and comment on its level of risk.

What are estimated liabilities? Provide at least two examples and explain why they are classified as estimated liabilities.

A _____________________ is a seller's obligation to replace or correct a product or service that fails to perform as expected within a specified period.

A short-term note payable:

If a company had net income of $2,379,600,interest expense of 234,000,a tax rate of 40%,and operating income of $4,200,000,what is the times interest earned ratio?

A note payable can be used to extend the payment due on an account payable.