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Exam 11: Current Liabilities and Payroll Accounting

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Question 111

Multiple Choice

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Companies report current liabilities on the balance sheet in

A) alphabetical order.
B) order of maturity.
C) random order.
D) order of magnitude.

E) A) and B)
F) A) and C)

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Question 112

Multiple Choice

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A company receives $396 of which $36 is for sales tax. The journal entry to record the sale would include a

A) debit to Sales Tax Expense for $36.
B) credit to Sales Taxes Payable for $36.
C) debit to Sales Revenue for $396.
D) debit to Cash for $360.

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

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Question 113

Multiple Choice

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Lulu Luxuries Company issued a four-year interest-bearing note payable for $200000 on January 1 2016. Each January the company is required to pay $50000 on the note. How will this note be reported on the December 31 2017 balance sheet?

Sales taxes collected by a retailer are recorded by

Notes payable are often used instead of accounts payable.

The current ratio permits analysts to compare the liquidity of different sized companies.

The timekeeping function includes supervisors monitoring hours worked through time cards and time reports.

Ada Marion earns a salary of $7500 per month during the year. FICA taxes are 7.65% on the first $117000 of gross earnings. Federal unemployment insurance taxes are 6.2% of the first $7000; however a credit is allowed equal to the state unemployment insurance taxes of 5.4% on the $7000. During the year $25600 was withheld for federal income taxes and $5700 was withheld for state income taxes. Instructions (a) Prepare a journal entry summarizing the payment of Ada's total salary during the year. (b) Prepare a journal entry summarizing the employer payroll tax expense on Ada's salary for the year. (c) Determine the cost of employing Grace for the year.

On October 1 2017 Dakota Company issued an $800000 10% nine-month interest-bearing note. If the Dakota Company is preparing financial statements at December 31 2017 the adjusting entry for accrued interest will include a:

A note payable is in the form of

Current maturities of long-term debt are often identified as long-term debt due within one year on the balance sheet.

A $30000 8% 9-month note payable requires an interest payment of $1800 at maturity.

Under IFRS liabilities are

Vick Vickers has a large consulting practice. New clients are required to pay one-half of the consulting fees up front. The balance is paid at the conclusion of the consultation. How does Vickers account for the cash received at the end of the engagement?

A current liability is a debt that can reasonably be expected to be paid

A contingency that is remote

Kenny Corsig an employee of Fenwick Company has gross earnings for the month of October of $3000. FICA taxes are 7.65% of gross earnings federal income taxes amount to $476 for the month state income taxes are 2% of gross earnings and authorizes voluntary deductions of $8 per month to the United Way. What is the net pay for Kenny?

A current liability is a debt that can be expected to be paid within ______________ year or the ______________ whichever is longer.