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Exam 9: Reporting and Analyzing Current Liabilities

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Question 81

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Employers are required to pay local,state and federal payroll taxes.

A) True
B) False

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Question 82

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A company sells its product subject to a warranty that covers the cost of parts for repairs during the six months after the date of sale.Warranty costs are estimated to be 6% of sales.During the month of June,the company performed warranty work and used $12,000 worth of parts for the warranty repairs.The total sales for June were equal to $450,000. 1.Record the warranty expense for the month of June. 2.Record the costs of the warranty work completed in June. 3.If the Estimated Warranty Liability account had a credit balance of $10,000 on May 31,what is the account balance at June 30?

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3.$1...

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Question 83

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Vacation benefits are a form of estimated liabilities for an employer.

An estimated liability:

Employers can use a wage bracket withholding table to compute federal income taxes withheld from each employee's gross pay.

Employers must keep certain payroll records,including individual earnings reports for each employee.

When the times interest earned ratio declines,the likelihood of default on liabilities increases.

Classify each of the following items

A company had income before interest expense and income taxes of $176,000 and its interest expense is $55,000.Calculate the company's times interest earned ratio.

Payments of FUTA are made quarterly to a federal depository bank if the total amount due exceeds $1,000.

The annual Federal Unemployment Tax Return is:

What are estimated liabilities? Provide at least two examples and explain why they are classified as estimated liabilities.

Classify each of the following items as a: current liability,long-term liability or not a liability.

Employers must pay FICA taxes that are equal to amount being withheld from their employees.

On June 1,2010,Martin Company signed a $25,000,120-day,6% note payable to cover a past due account payable. a. What is the total amount of interest to be paid on this note? b. Prepare Martin Company's general journal entry to record the issuance of the note payable c. Prepare Martin Company's general journal entry to record the payment of the note on September 29, 2010.

If a company had income before interest and taxes in the amount of $2,345,540 and a times interest earned ratio of 5.2,what would be the total amount of the company's interest expense?

If the times interest ratio:

When the number of withholding allowances increases,the amount of income tax withheld increases.

An employee earned $3,450 for the current period.Calculate the total and individual amounts to be withheld for social security (6.2%),Medicare (1.45%)and federal income tax (15%)assuming the entire employee's pay is subject to FICA taxes.

A corporation has a $42,000 credit balance in the Income Tax Payable account.Period end information shows that the actual liability is $50,000.The company should record an entry to debit Income Tax Expense for $8,000 and credit Income Taxes Payable for $8,000.