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Exam 10: Current Liabilities and Payroll

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Question 31

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Mobile Co.issued a $45,000,60-day,discounted note to Guarantee Bank.The discount rate is 6%.At maturity,assuming a 360-day year,the borrower will pay:

A) $45,450
B) $42,300
C) $45,000
D) $44,550

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

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Question 32

Multiple Choice

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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,48;federal income tax withheld,$120;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?

A) $568.74
B) $601.50
C) $660.00
D) $574.90

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

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Question 33

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

The journal entry a company uses to record the issuance of a discounted note for the purpose of borrowing funds for the business is

The total net pay for a period is determined from the payroll register.

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 salaries would include:

While separation of duties may play a strong role in the internal control of inventory,it is not significant in controlling payroll.

During its first year of operations,a company granted employees vacation privileges and pension rights estimated at a cost of $21,500 and $15,000.The vacations are expected to be taken in the next year and the pension rights are expected to be paid in the future 5-30 years.What is the total cost of vacation pay and pension rights to be recognized in the first year?

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

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.

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

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 journal entry to record the monthly payroll on April 30 would include a

Which of the following taxes would be deducted in determining an employee's net pay?

Excel Products Inc.pays its employees semimonthly.The summary of the payroll for December 31,2012 indicated the following: For the year ended 2012,$40,000 of the December 31 payroll is subject to social security tax of 6%;$120,000 is subject to Medicare tax of 1.5%;$10,000 is subject to state unemployment tax of 4.3% and federal unemployment tax of 0.8%.As of January 1,2013 all of the $120,000 is subject to all payroll taxes.Present the journal entries for payroll tax expense if the employees are paid (a)December 31 of the current year, (b)January 2 of the following year.

An employee receives an hourly rate of $30,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,48;federal income tax withheld,$300;cumulative earnings for year prior to current week,$90,700;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?

The detailed record indicating the data for each employee for each payroll period and the cumulative total earnings for each employee is called the

On July 8,Alton Co.issued an $80,000,6%,120-day note payable to Seller Co.Assume that the fiscal year of Alton Co.ends July 31.Using the 360-day year in your calculations,what is the amount of interest expense recognized by Alton in the current fiscal year?

John Woods' weekly gross earnings for the present week were $2,500.Woods has two exemptions.Using $80 value for each exemption,what is Woods' federal income tax withholding?

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

Assuming a 360-day year,when a $30,000,90-day,5% interest-bearing note payable matures,total payment will amount to: