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Exam 11: Current Liabilities and Payroll

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Question 41

Multiple Choice

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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

A) $49,750
B) $47,000
C) $49,000
D) $51,000

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

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Question 42

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Payroll taxes only include social security taxes and federal unemployment and state unemployment taxes.

A) True
B) False

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Question 43

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Which of the following will have no effect on an employee's take-home pay?

The cost of a product warranty should be included as an expense in the

The following totals for the month of February were taken from the payroll register of Arcon Company: How much is the total payroll expense for Arcon Company for this payroll? Assume that the monthly salaries expense remains the same for the entire year and no employees are hired or fired during that time. Based on what you learned in Chapter 11 about payroll taxes, do you expect the total payroll expense to stay the same every month? Explain.

The following totals for the month of June were taken from the payroll register of Young Company: The entry to record the accrual of employer's payroll taxes would include a

An employee receives an hourly rate of $15, 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, 46; federal income tax withheld, $110; cumulative earnings for the year prior to this week, $24,500; Social security tax rate, 6% 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. What is the net amount to be paid to the employee?

The Core Company had the following assets and liabilities as of December 31, 2012: Calculate: Current Ratio, Working Capital and Quick Ratio

Carmen Flores' weekly gross earnings for the week ending Dec. 7th were $2,500, and her federal income tax withholding was $525. Prior to this week Flores had earned $98,000 for the year. Assuming the social security rate is 6% on the first $100,000 of annual earnings and Medicare is 1.5% of all earnings, what is Flores' net pay?

While separation of duties may play a strong role in the internal control of inventory, it is significant in controlling payroll.

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

Amounts withheld from each employee for Social Security and Medicare varies by state.

Garrett Company sells merchandise with a one year warranty. In 2012, sales consisted of 3,500 units. It is estimated that warranty repairs will average $15 per unit sold, and 30% of the repairs will be made in 2012 and 70% in 2013. In the 2012 income statement, Garrett should show warranty expense of

The journal entry a company uses to record the issuance of an interest-bearing note for the purpose of borrowing funds for the business is

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) .

According to a summary of the payroll of Scotland Company, $450,000 was subject to the 7.0% social security tax and $500,000 was subject to the 1.5% Medicare tax. Federal income tax withheld was $98,000. Also, $15,000 was subject to state (4.2%) and federal (0.8%) unemployment taxes. The journal entry to record accrued payroll taxes would include:

Proper payroll accounting methods are important for a business for all the reasons below except

The journal entry a company uses to record the issuance of a note for the purpose of converting an existing account payable would be

The journal entry a company uses to record accrued vacation privileges for its employees at the end of the year is

An aid in internal control over payrolls that indicates employee attendance is