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Exam 9: Accounting for Current Liabilities

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Question 131

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On November 1,Alan Company signed a 120-day,8% note payable,with a face value of $9,000. -What is the adjusting entry for the accrued interest at December 31 on the note? (Use 360 days a year.)

A) No adjusting entry is required.
B) Debit interest payable, $120; credit interest expense, $120.
C) Debit Interest Expense, $120; credit Interest Payable, $120.
D) Debit Interest Expense, $720; credit Interest Payable, $720.
E) Debit Interest Payable, $240; credit Interest Expense, $240.

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

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Question 132

Multiple Choice

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The wage bracket withholding table is used to:

A) Compute social security withholding.
B) Compute Medicare withholding.
C) Compute federal income tax withholding.
D) Prepare the W-4.
E) Compute unemployment taxes.

F) C) and D)
G) A) and B)

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Question 133

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An employee earns $5,500 per month working for an employer.The FICA tax rate for Social Security is 6.2% of the first $118,500 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings.The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both unemployment taxes are applied to the first $7,000 of an employee's pay.The employee has $182 in federal income taxes withheld.The employee has voluntary deductions for health insurance of $150 and contributes $75 to a retirement plan each month.What is the amount of net pay for the employee for the month of January? (Round your intermediate calculations to two decimal places.)

The report that shows the pay period dates,hours worked,gross pay,deductions,and net pay of each employee for every pay period is the payroll register.

On January 31,Ransom Company's payroll register showed that its employers earned $30,320 of office salaries and $82,750 of sales salaries.Withholdings from the employees' salaries include FICA Social Security taxes as the rate of 6.2%,FICA Medicare taxes at the rate of 1.45%,$16,960 of federal income taxes,$3,350 of medical insurance deductions (which represents 50% of the total cost of the employee medical insurance),and $4,210 of 401(k)retirement contribution deductions.Ransom Company pays the other 50% of the employee insurance cost and matches the employee 401(k)contributions.Several employees earned more than $7,000 for the period which reduced salaries subject to unemployment to $104,000.No employees exceeded the FICA-Social Security taxable wage base. 1.Prepare the journal entry to record Ransom Company's January 31 payroll expenses and liabilities. 2.Prepare the journal entry to record Ransom Company's employer payroll taxes resulting from the January 31 payroll.Ransom's merit rating reduces its state unemployment (SUTA)to 4% of the first $7,000 paid each employee.The federal unemployment tax (FUTA)rate is 0.6%. 3.Prepare the journal entry to record Ransom's additional employee expenses.

Match each of the following terms with the appropriate definitions. -A bank authorized to accept deposits of amounts payable to the federal government,including payroll taxes.

FUTA requires employers to pay a federal unemployment tax on all salary or wages paid to each employee.

A company has three employees.Total salaries for the month of January were $8,000.The federal income tax rate for all employees is 15%.The FICA-social security tax rate is 6.2% and the FICA-Medicare tax rate is 1.45%.Calculate the amount of employee taxes withheld and prepare the company's journal entry to record the January payroll assuming these were the only deductions.

Match each of the following terms with the appropriate definitions. -Gross pay less all tax and voluntary deductions.

Match the following items with the appropriate designation (Current liability, Long-term liability, or Not a liability) . -Accounts payable

Payments of FUTA are made quarterly to a federal depository bank if the total amount due exceeds $500.

A company's income before interest expense and income taxes in 2014 and 2015 is $487,500 and $427,000,respectively.Its fixed interest expense was $125,000 for both years.Calculate the company's times interest earned ratio,and comment on its level of risk.

A liability is a probable future payment of assets or services that a company is presently obligated to make as a result of past transactions or events.

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

All of the following statements regarding FICA taxes are true except:

Which of the following do not apply to unearned revenues?

Interest expense is not:

On November 1,Alan Company signed a 120-day,8% note payable,with a face value of $9,000.Alan made the appropriate year-end accrual.What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made? (Use 360 days a year.)