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Exam 10: Current Liabilities and Payroll

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Question 21

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Which of the following is an example of a variable component of a payroll system?

A) hours worked
B) Medicare tax rate
C) rate of pay
D) social security number

E) B) and D)
F) A) and B)

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Question 22

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Thomas Martin receives an hourly wage rate of $40,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,48; federal income tax withheld,$350; social security tax rate,6.0%; and Medicare tax rate,1.5%.What is the gross pay for Martin?

A) $449
B) $1,730
C) $2,080
D) $1,581

E) A) and B)
F) All of the above

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Question 23

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The proceeds of a discounted note are equal to the face value of the note.

On July 8,Jones Inc.issued an $80,000,6%,120-day note payable to Miller Company.Assume that the fiscal year of Jones ends July 31.Using the 360-day year,what is the amount of interest expense recognized by Jones in the current fiscal year?

During the first year of operations,a company granted warranties on its products at an estimated cost of $8,500.The product warranty expense should be recorded in the years of the expenditures to repair the products covered by the warranty payments.

FICA tax becomes a liability to the federal government at the time an employee's payroll is prepared.

The Young Company has the following assets and liabilities: $\begin{array}{|l|r|}\hline \text { ASSETS }\\\hline \text { Cash } & \$ 35,000 \\\hline \text { Accounts receivable } & 15,000 \\\hline \text { Inventory } & 30,000 \\\hline \text { Equipment } & 50,000\\\hline \\\hline \text { LIABILITIES }\\\hline \text { Current portion of long-term debt } & 10,000 \\\hline \text { Accounts payable } & 2,000 \\\hline \text { Long-term debt } & 25,000\\\hline \end{array}$ Determine the quick ratio rounded to one decimal point.

Form W-2 is called the Wage and Tax Statement.

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

The journal entry to record the cost of warranty repairs that were incurred during the current period,but related to sales made in prior years,includes a debit to Warranty Expense.

McKay Company sells merchandise with a one-year warranty.In Year 1,sales consisted of 1,200 units.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.In the Year 1 income statement,McKay should show warranty expense of

Journalize the following transactions: Dec. $\quad$ 31 The accrued product warranty expense for the year is estimated to be 1.5% of sales.Sales for the year totaled $7,760,000. $\quad$$\quad$$\quad$ 31 The accrued vacation pay for the year is estimated to be $46,000. $\quad$$\quad$$\quad$ 31 Paid Reliable Insurance Co.$85,000 as fund trustee for the pension plan.The annual pension cost is $109,000.

Taylor Bank lends Guarantee Company $150,000 on January 1.Guarantee Company signs a $150,000,8%,9- month note.The entry made by Guarantee Company on January 1 to record the proceeds and issuance of the note is

The proceeds from discounting a $20,000,60-day,note payable at 6% is $20,200.

Assuming a 360-day year,proceeds of $48,750 were received from discounting a $50,000,90-day note at a bank.The discount rate used by the bank in computing the proceeds was

Payroll entries are made with data from the

The borrower issues a note payable to a creditor.

Journalize the following transactions for Riley Corporation: Dec. $\quad$ 31 The accrued product warranty expense for the year is estimated to be 2.5% of sales. Sales for the year totaled $8,850,000. $\quad$$\quad$$\quad$ 31 The accrued vacation pay for the year is estimated to be $75,000. $\quad$$\quad$$\quad$ 31 Paid First Insurance Co. $55,000 as fund trustee for the pension plan. The annual pension cost is $87,000.

Form W-4 is a form authorizing employers to withhold a portion of employee earnings for payment of an employee's federal income taxes.

Generally,all deductions made from an employee's gross pay are required by law.