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Exam 10: Current Liabilities and Payroll

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Question 51

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The Crafter Company had the following assets and liabilities as of December 31,2012: Determine the quick ratio for the end of the year (rounded to one decimal point) .

A) 5.3
B) 3.6
C) 3.3
D) 2.3

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

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Question 52

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For Company A and Company B:

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Question 53

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For which of the following taxes is there no ceiling on the amount of employee annual earnings subject to the tax?

Use the following information to answer the following questions. The following totals for the month of April were taken from the payroll register of Magnum Company. The entry to record accrual of employer's payroll taxes would include a

An employee receives an hourly rate of $27,with time and a half for all hours worked in excess of 40 during a week.Payroll data for the current week are as follows: hours worked,46;federal income tax withheld,$350;cumulative earnings for year prior to current week,$99,700;social security tax rate,6.0% on maximum of $100,000;and Medicare tax rate,1.5% on all earnings.What is the net amount to be paid to the employee?

Most employers are required to withhold federal unemployment taxes from employee earnings.

The use of a separate payroll bank account is not an advantageous control,because it creates more complexity in reconciliation functions for a company and invites theft.

On August 1,Batson Company issued a 60-day note with a face amount of $140,000 to Jergens Company for merchandise inventory.(Assume a 360-day year is used for interest calculations. )

Interest expense is reported in the operating expense section of the income statement.

Estimating and recording product warranty expense in the period of the sale best follows which of the following accounting concepts?

Elgin Company sells merchandise with a one year warranty.Sales consisted of 2,500 units in 2012 and 2,000 units in 2013.It is estimated that warranty repairs will average $10 per unit sold,and 30% of the repairs will be made in 2012 and 70% in 2013 for the 2012 sales.Similarly,30% of repairs will be made in 2013 and 70% in 2014 for the 2013 sales.In the 2013 income statement,how much of the warranty expense shown will be due to 2012 sales?

If,prior to the last weekly payroll period of the calendar year,the cumulative earnings for an employee are $98,800,earnings subject to social security tax are $100,000,and the tax rate is 6.0%,the employer's social security tax on the $2,000 gross earnings paid on the last day of the year is $120.

Research Company sells merchandise with a one year warranty.In 2012,sales consisted of 2,500 units.It is estimated that warranty repairs will average $10 per unit sold,and 30% of the repairs will be made in 2012 and 70% in 2013.In the 2012 income statement,Research should show warranty expense of

During September,Excom sold 100 radios for $50 each.Each radio cost Excom $30 to purchase,and carried a two-year warranty.If 5% of the goods sold typically need to be replaced over the warranty period and one is actually replaced during September,for what amount in September would Excom debit Product Warranty Expense?

The journal entry a company uses to record the payment of a discounted note is

Journalize the following transactions:

Most employers are required to withhold from employees which of the following employment taxes?

An employee receives an hourly rate of $45,with time and a half for all hours worked in excess of 40 during the week.Payroll data for the current week are as follows: hours worked,48;federal income tax withheld,$950;Social security tax rate,6.5% on maximum of $100,000;and Medicare tax rate,1.5% on all earnings;state unemployment compensation tax,3.4% on the first $7,000;federal unemployment compensation tax,.8% on the first $7,000. Calculate the employer's payroll tax expense if: a.this is the first payroll of the year and the employee has no cumulative earnings for the year to date. b.the employee's cumulative earnings for the year prior to this week equal $6,200. c.the employee's cumulative earnings for the year prior to this week equal $98,700. Employee wages = (40 x $45 + 8 x $67.50)$2,340

The journal entry a company uses to record partially funded pension rights for its salaried employees,at the end of the year is

Ecco Company sold $150,000 of kitchen appliances during September under a 6 month warranty.The cost to repair defects under the warranty is estimated at 6% of the sales price.On October 15 a customer required a $200 part replacement,plus $85 labor under the warranty. Provide the journal entry for (a. )the estimated expense on September 30 and (b. )the October 15 warranty work.