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Exam 11: Current Liabilities and Payroll

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Question 61

True/False

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For a current liability to exist, the following two tests must be met. The liability must be due usually within a year and must be paid out of current assets.

A) True
B) False

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Question 62

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

A) True
B) False

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Question 63

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An unfunded pension liability is reported on the balance sheet as

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

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

Which of the following forms is typically given to employees at the end of the calendar year so that employees can file their individual income tax forms?

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

Use the following information to answer the following questions. Assuming no employees are subject to ceilings for their earnings, Jensen Company has the following information for the pay period of January 15 - 31, 20xx. Assuming that all wages are subject to federal and state unemployment taxes, the Payroll Taxes Expense would be recorded as:

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

Dixon Sales has seven sales employees which 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 1/2% in State Disability Insurance. Journalize the recognition of the pay period ending January 19th which will be paid to the employees January 26th. (Keep in mind that none of the employees is subject to a ceiling amount for social security.)

The journal entry a company uses to record the payment of an interest-bearing note is

FICA tax becomes a liability to the federal government at the time an employee's payroll is prepared.

An aid in internal control over payrolls that indicates employee attendance 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

Journalize the following, assuming a 360-day year is used for interest calculations:

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.

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 accounting for defined benefit plans is usually very easy and straight forward.

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.

Journalize the following transactions: