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Exam 10: Current Liabilities and Payroll

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Question 41

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Dixon Sales has seven sales employees that receive weekly paychecks.Each earns $10.25 per hour and each has worked 40 hours in the pay period.Each employee pays 12% of gross in federal income tax,3% in state income tax,6% of gross in social security tax,1.5% of gross in Medicare tax,and 0.5% in state disability insurance.Journalize the recognition of the pay period ending January 19 which will be paid to the employees January 26.

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Question 42

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The payroll summary for December 31 for Waters Co.revealed total earnings of $80,000.Earnings subject to 6% social security tax were $60,000; earnings subject to 1.5% Medicare tax were $80,000; and earnings of $3,000 were subject to 4.3% state and 0.8% federal unemployment compensation tax.Journalize the entry to record the accrual of payroll taxes.

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Question 43

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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.

Davis and Thompson have earnings of $850 each.The social security tax rate is 6% and the Medicare tax rate is 1.5%.Assuming that the payroll will be paid on December 29,what will be the employer's total FICA tax for this payroll period?

Assume that social security taxes are payable at a 6% rate and Medicare taxes are payable at a 1.5% rate with no maximum earnings,and that federal and state unemployment compensation taxes total 4.6% on the first $7,000 of earnings.If an employee earns $2,500 for the current week and the employee's year-to-date earnings before this week were $6,800,what is the total payroll taxes related to the current week?

$\begin{array}{lr}\text { Salaries } & \$ 12,000 \\\text { FICA taxes withheld } & 900 \\\text { Income taxes withheld } & 2,500 \\\text { Medical insurance deductions } & 450 \\\text { Federal unemployment taxes } & 32\\\text { State unemployment taxes }&216\\\end{array}$ -The following totals for the month of April were taken from the payroll register of Magnum Company: $\begin{array}{ll}\text { Salaries }& \$ 10,000 \\\text { FICA taxes withheld } & 750\\\text { Income taxes withheld } & 2,000\\\text { Medical insurance deductions } & 450\\\text { Unemployment taxes }&420\end{array}$ The entry to record accrual of employer's payroll taxes would include a

Assuming no employees are subject to ceilings for their earnings, Harris Company has the following information for the pay period of January 15–31. -Salaries Payable would be recorded in the amount of

On May 18,Rodriguez Co.issued an $84,000,6%,120-day note payable on an overdue account payable to Wilson Company.Assume that the fiscal year of Rodriguez ends on June 30.Which of the following relationships is true?

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

Quick assets include

$\begin{array}{lr}\text { Salaries } & \$ 12,000 \\\text { FICA taxes withheld } & 900 \\\text { Income taxes withheld } & 2,500 \\\text { Medical insurance deductions } & 450 \\\text { Federal unemployment taxes } & 32\\\text { State unemployment taxes }&216\\\end{array}$ -The entry to record accrual of employer's payroll taxes would include a

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

Mobile Sales has five sales employees which receive weekly paychecks.Each earns $11.50 per hour and each has worked 40 hours in the pay period.Each employee pays 12% of gross in federal income tax,3% in state income tax,6% of gross in social security tax,1.5% of gross in Medicare tax,and 0.5% in state disability insurance.Journalize the pay period ending January 19 which will be paid to the employees January 26.

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

Obligations that may arise from past transactions only if certain events occur in the future are contingent liabilities.

Baker Green's weekly gross earnings for the week ending December 7 were $2,500,and her federal income tax withholding was $525.Prior to this week Green had earned $98,000 for the year.Assuming the social security rate is 6% and Medicare is 1.5%,what is Green's net pay?

Each year there is a ceiling for the amount that is subject to all of the following except

Amounts withheld from each employee for social security and Medicare vary by state.

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

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