Question 1

Deposits of amounts payable to the federal government may be paid through federal depository banks.

Accepted Answer

A) True 
 B)False

Question 2

On April 12, Hong Company agrees to accept a 60-day, 10%, $4,500 note from Indigo Company to extend the due date on an overdue account. What is the journal entry that Indigo Company would make, when it records payment of the note on the maturity date? (Use 360 days a year.)

Accepted Answer

A)  Debit Cash $4,575; credit Interest Revenue $75; credit Notes Payable $4,500.
B)  Debit Notes Payable $4,500; credit Interest Expense $75, credit Cash $4,425.
C)  Debit Notes Payable $4,500; debit Interest Expense $75; credit Cash $4,575.
D)  Debit Cash $4,575; credit Interest Revenue $75; credit Notes Receivable $4,500.
E)  Debit Notes Payable $4,500; debit Interest Expense $112; credit Cash $4,612.F) C) and E)
G) None of the above

Question 3

Furniture World is required by law to collect and remit sales taxes to the state. If Furniture World has $78,000 of cash sales that are subject to a 6% sales tax, what is the journal entry to record the cash sales?

Accepted Answer

A)  Debit Accounts Receivable $82,680; credit Sales $78,000; credit Sales Taxes Payable $4,680.
B)  Debit Cash $82,680; credit Sales $78,000; credit Sales Taxes Payable $4,680.
C)  Debit Sales Taxes Payable $4,680; debit Cash $73,220; credit Sales $78,000.
D)  Debit Cash $78,000; credit Sales $73,320; credit Sales Taxes Payable $4,680.
E)  Debit Cash $78,000; credit Sales $78,000; and record the taxes when paid.F) A) and E)
G) A) and C)

Question 4

Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $32,500 to be paid during January of the following year. The journal entry on December 31 to record the bonuses is:

Accepted Answer

A)  Debit Unearned Bonuses $32,500; credit Bonus Payable $32,500.
B)  No entry since the bonuses are not paid until January.
C)  Debit Employee Bonus Expense $32,500; credit Prepaid Employee Bonus $32,500.
D)  Debit Estimated Bonus Payable $32,500; credit Cash $32,500.
E)  Debit Employee Bonus Expense $32,500; credit Bonus Payable $32,500.F) A) and E)
G) C) and D)

Question 5

Match between columns
                        Premises: Known obligations of an uncertain amount that can be reasonably estimated.
Taxes that fund Social Security and Medicare, assessed on both employer and employees under the Federal Insurance Contributions Act.
Payroll taxes on employers assessed by the federal government to support the federal unemployment insurance program.
A seller's obligation to replace or correct a product or service that fails to perform as expected within a specified period.
Gross pay less all tax and voluntary deductions.
Obligations of a company requiring payment in more than one year or operating cycle.
A table of amounts of income tax to be withheld from employees' wages.
A potential obligation that depends on a future event arising from a past transaction.
A number indicated on an employee's Form W-4 that is used to reduce the amount of federal income tax withheld from an employee's pay.
A measure provided by a state to employers that reflects a company's stability in employing workers.

Accepted Answer

The Answer of Long-term liability and Wage bracket withholding table is...

Question 6

A liability is incurred when income is earned because income tax expense is created by earning income.

Accepted Answer

A) True 
 B)False

Question 7

A contingent liability is a potential obligation that depends on a future event arising from a past transaction or event.

Accepted Answer

A) True 
 B)False

Question 8

What is a short-term note payable? Explain the accounting issues related to notes payable.

Accepted Answer

A short-term note payable is a written p...

Question 9

During June, Vixen Company sells $850,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 3% of the selling price. Customers returned $14,000 of merchandise for warranty replacement during the month. The entry to settle the customer warranties is:

Accepted Answer

A)  Debit Warranty Expense $11,500; credit Estimated Warranty Liability $11,500.
B)  Debit Estimated Warranty Liability $14,000; credit Merchandise Inventory $14,000.
C)  Debit Estimated Warranty Liability $11,500; credit Merchandise Inventory $11,500.
D)  Debit Warranty Expense $14,000; credit Estimated Warranty Liability $14,000.
E)  Debit Estimated Warranty Liability $25,500; credit Warranty Expense $25,500.F) None of the above
G) A) and E)

Question 10

Experience shows that the default rate on liabilities increases sharply when times interest earned falls below 1.5 to 2.0 and remains at that level or lower for several time periods.

Accepted Answer

A) True 
 B)False

Question 11

The amount of federal income taxes withheld from an employee's paycheck is determined by:

Accepted Answer

A)  The amount of social security taxes withheld.
B)  Multiplying the gross pay by 6.2%.
C)  Tax tables provided by the state in which the employee works.
D)  The employer's merit rating.
E)  Current earnings for the pay period and number of withholding allowances the employee claims.F) C) and E)
G) B) and E)

Question 12

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

Accepted Answer

The amount of federal income tax withhel...

Question 13

On September 1, Knack Company signed a $50,000, 90-day, 5% note payable with Central Savings Bank. What is the journal entry that should be recorded by Knack upon maturity of the note? (Use 360 days a year.)

Accepted Answer

A)  Debit Notes Payable $50,625; credit Cash $50,625.
B)  Debit Notes Payable $50,000; debit Interest Expense $625; credit Cash $50,625.
C)  Debit Interest Expense $625; credit Interest Payable $625.
D)  Debit Notes Payable $50,000; credit Interest Revenue $625; credit Cash $49,375.
E)  Debit Cash $50,625; credit Notes Receivable $50,625.F) C) and D)
G) D) and E)

Exam 11: Current Liabilities and Payroll Accounting

Deposits of amounts payable to the federal government may be paid through federal depository banks.

Correct Answer
verified

The amount of federal income taxes withheld from an employee's paycheck is determined by:

Correct Answer
verified

Furniture World is required by law to collect and remit sales taxes to the state. If Furniture World has $78,000 of cash sales that are subject to a 6% sales tax, what is the journal entry to record the cash sales?

Correct Answer
verified

Match each of the appropriate definitions with terms

Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $32,500 to be paid during January of the following year. The journal entry on December 31 to record the bonuses is:

Correct Answer
verified

On September 1, Knack Company signed a $50,000, 90-day, 5% note payable with Central Savings Bank. What is the journal entry that should be recorded by Knack upon maturity of the note? (Use 360 days a year.)

Correct Answer
verified

On April 12, Hong Company agrees to accept a 60-day, 10%, $4,500 note from Indigo Company to extend the due date on an overdue account. What is the journal entry that Indigo Company would make, when it records payment of the note on the maturity date? (Use 360 days a year.)

Correct Answer
verified

What is a short-term note payable? Explain the accounting issues related to notes payable.

Correct Answer
verified
A short-term note payable is a written p...
View Answer

Experience shows that the default rate on liabilities increases sharply when times interest earned falls below 1.5 to 2.0 and remains at that level or lower for several time periods.

Correct Answer
verified

A liability is incurred when income is earned because income tax expense is created by earning income.

Correct Answer
verified

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

Correct Answer
verified
The amount of federal income tax withhel...
View Answer

During June, Vixen Company sells $850,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 3% of the selling price. Customers returned $14,000 of merchandise for warranty replacement during the month. The entry to settle the customer warranties is:

Correct Answer
verified

A contingent liability is a potential obligation that depends on a future event arising from a past transaction or event.

Correct Answer
verified

Exam 11: Current Liabilities and Payroll Accounting

Deposits of amounts payable to the federal government may be paid through federal depository banks.

Correct AnswerverifiedShow Answer

The amount of federal income taxes withheld from an employee's paycheck is determined by:

Correct AnswerverifiedShow Answer

Furniture World is required by law to collect and remit sales taxes to the state. If Furniture World has $78,000 of cash sales that are subject to a 6% sales tax, what is the journal entry to record the cash sales?

Correct AnswerverifiedShow Answer

Match each of the appropriate definitions with terms

Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $32,500 to be paid during January of the following year. The journal entry on December 31 to record the bonuses is:

Correct AnswerverifiedShow Answer

On September 1, Knack Company signed a $50,000, 90-day, 5% note payable with Central Savings Bank. What is the journal entry that should be recorded by Knack upon maturity of the note? (Use 360 days a year.)

Correct AnswerverifiedShow Answer

On April 12, Hong Company agrees to accept a 60-day, 10%, $4,500 note from Indigo Company to extend the due date on an overdue account. What is the journal entry that Indigo Company would make, when it records payment of the note on the maturity date? (Use 360 days a year.)

Correct AnswerverifiedShow Answer

What is a short-term note payable? Explain the accounting issues related to notes payable.

Correct AnswerverifiedA short-term note payable is a written p...View AnswerShow Answer

Experience shows that the default rate on liabilities increases sharply when times interest earned falls below 1.5 to 2.0 and remains at that level or lower for several time periods.

Correct AnswerverifiedShow Answer

A liability is incurred when income is earned because income tax expense is created by earning income.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedThe amount of federal income tax withhel...View AnswerShow Answer

During June, Vixen Company sells $850,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 3% of the selling price. Customers returned $14,000 of merchandise for warranty replacement during the month. The entry to settle the customer warranties is:

Correct AnswerverifiedShow Answer

A contingent liability is a potential obligation that depends on a future event arising from a past transaction or event.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A short-term note payable is a written p...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The amount of federal income tax withhel...
View Answer

Correct Answer
verified

Correct Answer
verified