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Exam 10: Liabilities: Current, Installment Notes, and Contingencies

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Question 1

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Use the following key (a-d) to identify the proper treatment of each contingent liability.a.Record only b.Record and disclose c.Disclose only d.Do not record or disclose -Event is reasonably possible but amount is not estimable

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c

Question 2

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Federal income taxes are subject to a maximum amount per employee per year.

A) True
B) False

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Question 3

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Which of the following is the most desirable quick ratio?

Quick assets include

The proceeds of a discounted note are equal to the face value of the note.

Match the following terms or phrases in (a-g) with the explanations in 1-8. Terms or phrases may be used more than once. -(Cash + Temporary investments + Accounts receivable)/Current liabilities A)Current ratio B)Working capital C)Quick assets D)Quick ratio E)Record an accrual and disclose in the notes to the financial statements F)Disclose only in notes to financial statements G)No disclosure needed in notes to financial statements

Anderson Co. issued a $50,000, 60-day, discounted note to National Bank. The discount rate is 6%. At maturity, assuming a 360-day year, the borrower will pay

On January 1, Year 1, Zero Company obtained a $52,000, 4-year, 6.5% installment note from Regional Bank. The note requires annual payments of $15,179, beginning on December 31, Year 1. The December 31, Year 2 carrying amount in the allocation of periodic payments table for this installment note will be equal to

In a defined benefits plan, the employer bears the investment risks in funding a future retirement income benefit.

Notes payable may be issued to creditors to satisfy previously created accounts payable.

Nelson Industries warrants its products for one year. The estimated product warranty is 4.3% of sales. Sales were $475,000 for September. In October, a customer received warranty repairs requiring $215 of parts and $65 of labor.​ (a)Journalize the adjusting entry required at September 30, the end of the first month of the current year, to record the estimated product warranty expense.(b)Journalize the entry to record the warranty work provided in October.​

Estimating and recording product warranty expense in the period of the sale best follows the

Taylor Bank lends Guarantee Company $150,000 on January 1. Guarantee Company signs a $150,000, 8%, 9-month, interest-bearing note. The entry made by Guarantee Company on January 1 to record the proceeds and issuance of the note is

FICA tax is a payroll tax that is paid only by employers.

The current assets and current liabilities for Kolbie Company and Newton Company are as follows: *These represent prepaid expenses and other non-quick current assets.(a) Determine the quick ratio for both companies. Round to two decimal places.(b) Interpret the quick ratio difference between the two companies.

Journalize the following transactions:

Zennia Company provides its employees with varying amounts of vacation per year, depending on the length of employment. The estimated amount of the current year's vacation cost is $135,000. On December 31, the end of the current year, the current month's accrued vacation pay is

Chang Co. issued a $50,000, 120-day, discounted note to Guarantee Bank. The discount rate is 6%. Assuming a 360-day year, the cash proceeds to Chang Co. are

The summary of the payroll for the monthly pay period ending July 15 indicated the following: Journalize the entries to record (a) the payroll and (b) the employer's payroll tax expense for the month. The state unemployment tax rate is 5.4%, and the federal unemployment tax rate is 0.8%. Only $25,000 of salaries are subject to unemployment taxes.

For proper matching of revenues and expenses, the estimated cost of fringe benefits must be recognized as an expense of the period during which the employee earns the benefits.