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Exam 9: Accounting for Current Liabilities

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Question 1

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Obligations due within one year or the company's operating cycle,whichever is longer,are ________.

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Question 2

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A table that shows the amount of federal income tax to be withheld from an employee's pay is the:

A) Form 941.
B) Tax table.
C) Wage bracket withholding table.
D) W-2.
E) W-4.

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

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Question 3

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

Identify and explain the types of employer payroll taxes.

A high merit rating for state unemployment taxes means that an employer has high employee turnover or seasonal hiring.

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

A liability cannot be divided between current and noncurrent liabilities.

Estimated liabilities commonly arise from all of the following except:

FUTA requires employers to pay a federal unemployment tax on the first $1 million in salary or wages paid to each employee.

During the first week of January,an employee works 46 hours.For this company,workers earn 150% of their regular rate for hours in excess of 40 per week.Her pay rate is $16 per hour,and her wages are subject to no deductions other than FICA Social Security,FICA Medicare,and federal income taxes.The tax rate for Social Security is 6.2% of the first $128,400 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 $80 in federal income taxes withheld.What is the amount of this employee's gross pay for the first week of January?

A company sells sofas with a 6-month warranty.In January,the company sold 100,000 sofas at $1,750 each; and 500 sofas needed repairs during that same month.The total repairs amounted to $85,000 costs from the upholstery materials inventory.It is estimated that 2% of all units sold will need repairs under warranty at an estimated cost of $200 per unit.Prepare the journal entries to record (a)estimated warranty expense for January and (b)warranty repair costs for January.

Unearned revenues are amounts received in advance from customers for future products or services.

A company estimates that warranty expense will be 4% of sales.The company's sales for the current period are $185,000.The current period's entry to record the warranty expense is:

The times interest earned ratio reflects:

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

Kelso had income before interest expense and income taxes of $570 million and interest expense of $37 million.Calculate Kelso' times interest earned.

Accrued vacation benefits are a form of estimated liability for an employer.

FUTA taxes are:

Each employee records the number of withholding allowances claimed on the withholding allowance certificate that is filed with the employer,which is the Form W-4.

Triston Vale is paid on a monthly basis.For the month of January of the current year,he earned a total of $5,210.FICA tax for Social Security is 6.2% on the first $128,400 of earnings each calendar year and the FICA tax for Medicare is 1.45% of all earnings.The 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 amount of Federal Income Tax withheld from his earnings was $885.70.What is the amount of the employer's payroll taxes expenses for this employee?