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Exam 11: Current Liabilities and Payroll Accounting

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Question 21

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Identify and discuss the factors involved in computing federal income taxes for employees.

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The amount of federal income tax withhel...

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Question 22

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The difference between the amount received from issuing a note payable and the amount repaid is referred to as:

A) Interest.
B) Principle.
C) Face Value.
D) Cash.
E) Accounts Payable.

F) C) and E)
G) A) and E)

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Question 23

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Metro Express has 5 sales employees, each of whom earns $4,000 per month and is paid on the last working day of the month. Each employee's wages are subject to FICA social security taxes of 6.2% and Medicare taxes of 1.45% on all wages. Withholding for each employee also includes federal income tax of 16% and monthly medical insurance premiums of $110 for each employee. a. Prepare the general journal entry to accrue the monthly sales salaries expense at January 31. b. The employer payroll taxes for Metro Express include FICA taxes, federal unemployment taxes of 0.8% of the first $7,000 paid each employee, and state unemployment taxes of 4.0% of the first $7,000 paid to each employee. Prepare the journal entry to record the employer's payroll taxes at January 31 for Metro Express. (Assume that none of the employees has reached the unemployment limit of $7,000.)

A payroll register includes:

Helix Co. entered into the following transactions involving short-term notes payable. On May 14, Helix purchased $40,000 merchandise from Advent Co., terms are 2/15, n/30. Helix uses the perpetual inventory system. On May 29, Helix replaced the May 14 account payable with a 60-day, $30,000 note bearing 8% annual along with paying $10,000 in cash. ________ Paid the amount due on the note at maturity. 1. Determine the maturity date for the note. 2. Prepare journal entries for all the preceding transactions and events.

On March 17, Grady Company agrees to accept a 60-day, 10%, $4,500 note from Alert Company to extend the due date on an overdue account. What is the journal entry needed to record the transaction by Alert Company?

On September 15, SportsWorld borrowed $75,000 cash from FirstBank by signing a 12%, 60-day note payable. a. Prepare SportsWorld's journal entry to record the issuance of the note payable. b. Prepare SportsWorld's journal entry to record the payment of the note at maturity.

All of the following statements regarding long-term liabilities are True except?

The state unemployment tax rates applied to an employer are adjusted according to an employer's merit rating.

Phil Phoenix is paid monthly. For the month of January of the current year, he earned a total of $8,288. The FICA tax for social security is 6.2% and the FICA tax rate for Medicare is 1.45%. The FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The amount of federal income tax withheld from his earnings was $1,375.17. His net pay for the month is:

To compute the amount of tax withheld from an employee's pay, employers can use a _______________________________________________________ table.

A company's payroll for the week ended May 15 included earned salaries of $20,000. All of that week's pay is subject to FICA social security taxes of 6.2% and Medicare taxes of 1.45%. In addition, the company withholds the following amounts for this weekly pay period: $900 for medical insurance, $3,400 for federal income taxes, and $180 for union dues. a. Prepare the general journal entry to accrue the payroll. b. The company is subject to state unemployment taxes at the rate of 2% and federal unemployment taxes at the rate of 0.8%. By May 15, some employees had earned over $7,000, so only $9,000 of the $20,000 weekly gross pay was subject to unemployment tax. Prepare the general journal entry to accrue the employer's payroll tax expense.

The Wage and Tax Statement is:

Identify and explain the types of employer payroll taxes.

A liability does not exist if there is any uncertainty about whom to pay, when to pay, or how much to pay.

All of the following statements related to current liabilities for U.S. GAAP and IFRS are True except:

A company's income before interest expense and taxes is $250,000 and its interest expense is $100,000. Its times interest earned ratio is .4. $250,000/$100,000 = 2.5

An employee earned $47,000 during the year working for an employer. 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:

On November 1, Bob's Skateboards signed a $12,000, 90-day, 5% note payable to cover a past due account payable. a. What amount of interest expense on this note should Bob's Skateboards report on year-end December 31? b. Prepare Bob's journal entry to record the issuance of the note payable. c. Prepare Bob's journal entry to record the payment of the note on February 1 of the following year.

__________ allowances are items that reduce the amount of federal income taxes owed by the individual.