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Exam 10: Current Liabilities and Payroll

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Question 81

Multiple Choice

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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

A) debit to Payroll Tax Expense for $248
B) credit to FICA Taxes Payable for $1,100
C) credit to Payroll Tax Expense for $248
D) debit to Payroll Tax Expense for $798

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

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Question 82

True/False

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A loan in which the lender deducts interest from the amount borrowed before the money is advanced to the borrower is called an interest bearing note.

A) True
B) False

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Question 83

Multiple Choice

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Assuming no employees are subject to ceilings for their earnings, Moore Company has the following information for the pay period of December 15 - 31, 20xx. Salaries Payable would be recorded for

The total earnings of an employee for a payroll period is referred to as

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

During the first year of operations, a company granted warranties on its products. The estimated cost of the product warranty liability at the end of the year is $8,500. The product warranty expense of $8,500 should be recorded in the years of the expenditures to repair the products covered by the warranty payments.

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.

Payroll taxes are based on the employee's net pay.

On October 1, Ramos Co. signed a $90,000, 60-day discounted note at the bank. The discount rate was 6%, and the note was paid on November 30. (Assume a 360-day year is used for interest calculations.)

The journal entry to record the cost of warranty repairs that were incurred during the current period, but related to sales made in prior years, includes a debit to Warranty Expense.

Assuming a 360-day year, proceeds of $48,750 were received from discounting a $50,000, 90-day note at a bank. The discount rate used by the bank in computing the proceeds was

Depending upon when an unfunded pension liability is to be paid, it will be classified on the balance sheet as either a long-term or a current liability.

Journalize the following entries on the books of Winston Co. for August 1, September 1, and November 30. (Assume a 360-day year is used for interest calculations.)

Journalize the following entries on the books of the borrower and creditor. Label accordingly. (Assume a 360-day year is used for interest calculations.)

The following totals for the month of June were taken from the payroll register of Arcon Company: The entry to record the payment of net pay would include a

Based on the following data, what is the acid-test ratio, rounded to one decimal point?

Which of the following is the most desirable quick ratio?

During the first year of operations, employees earned vacation pay of $35,000. The vacations will be taken during the second year. The vacation pay expense should be recorded in the second year as the vacations are taken by the employees.

Assuming a 360-day year, the interest charged by the bank, at the rate of 9%, on a 90-day, discounted note payable for $100,000 is

On October 30, Seba Salon, Inc. issued a 90-day note with a face amount of $60,000 to Reyes Products, Inc. for merchandise inventory. Determine the proceeds of the note assuming the note is discounted at 8%.