ACCT 211 Read & Interact Chapter 9 Accounting for Current Liabilities solutions complete answers

ACCT 211 Read & Interact Chapter 9 Accounting for Current Liabilities solutions complete answers 

 

Form 941, which employers use to report FICA and income tax information to the IRS is due:

 

Which of the following contingent liabilities would require a company to record a note to the financial statements? (Check all that apply.)

 

The form an employer files and submits to the IRS to report FICA tax information is Form  _.

 

A potential legal claim is recorded 

 

The ratio of income before interest expense (and any income taxes) divided by interest expense reflects the risk of a company not being able to pay fixed expenses if sales decline is called the ____________ ratio.

 

When a company guarantees the payment of debt owed by a supplier, customer or another company, the guarantor usually discloses the guarantee as a  _ liability.

 

Paid absences offered to employees are called  _ benefits.

 

In order for a contingent liability to be recorded as a journal entry in the financial statements, it must be (probable/reasonably possible/remote)  and reasonably estimable.

 

A   is a seller's obligation to replace or fix a product (or service) that fails to perform as expected within a specified period.

 

Abby Co. allows each employee two weeks of paid time off during each calendar year. Since employees are working for 50 weeks, rather than 52 weeks, Abby must accrue the paid time off during the 50 weeks that the employees work. The year-end adjusting entry is recorded as a credit to the ________ account.

 

Unearned subscription revenues that extends over multiple periods is an example of a _______ known liability.

 

Employee income tax depends on: (Check all that apply).

 

________ are amounts owed to suppliers for products or services purchased on credit.

 

Amounts withheld from employee's earnings for employee income tax is considered a _____ by the employer until the government is paid.

 

A known liability is a measurable obligation arising from agreements, contracts, or laws. Known liabilities would include all of the following items, except:

 

Each month, a corporation will accrue income taxes based on the month's earnings. To record the income tax for the month, the company will debit the Income Tax Expense account and credit the ________ account.

 

Which of the following situations is not a contingent liability?

 

Which of the following situations would require a journal entry to record the contingent liability in the financial statements?

 

Employers are required to prepare and submit payroll reports to explain how they compute which of the following taxes? (Check all that apply.)

 

A ___________ is when an employer provides employees with a percentage of the net income earned during the year.

 

Kenesha Co. reported income before interest expense and income taxes of $30,000; interest expense of $3,000; and income taxes of $4,000. Calculate the times interest earned ratio.

 

Abby Co. allows each employee two weeks of paid time off during each calendar year. Since employees are working for 50 weeks, rather than 52 weeks, Abby must accrue the paid time off during the 50 weeks that the employees work. This accrual is recorded under the ________ account.

 

Keys Co. is located in Florida. An evacuation has been ordered due to Hurricane Edward, which is headed in the direction of Keys. Keys should record a contingent liability prior to the evacuation.

 

Which of the following represent reasonably possible contingent liabilities? Select all that apply.

 

Angela Bennett is an employee of Marks Co. This past year, Angela received 1% of Marks net income, in addition to her annual salary. This added benefit is called a:

 

A known obligation of an uncertain amount that can be reasonably estimated is called a(n)       liability.

 

Employee ________ are perks that are provided in addition to salaries and wages, such as all or part of medical, dental, life and disability insurance.

 

A(n) ______ liability is a known obligation that is of an uncertain amount but that can be reasonably estimated.

 

Employers must pay employee taxes in addition to those paid by the employees. Which of the following is paid only by the employer?

 

_______ is(are) the total compensation an employee earns including wages, salaries, commissions, bonuses, and any compensation earned before deductions such as taxes.

 

A written promise to pay a specified amount on a stated future date within one year or the company's operating cycle, whichever is longer, is considered a __________.

 

Unearned subscription revenues often consist of liabilities that will come due within one year and beyond one year. This is an example of a _______ known liability.

 

FICA and unemployment taxes are examples of (employee/employer)       taxes.

 

A liability created by buying goods or services on credit is typically recorded to            .

 

A measurable obligation arising from agreements, contracts, or laws is called a  n     liability.

 

A known liability arises from a situation with little uncertainty, with set agreements, contracts, or laws. These liabilities are measurable. Known liabilities would include all of the following items, except:

 

Cadie Construction Co. signed a note promising to pay a cement supplier $1,000 60-days from now. As a result of this transaction, Cadie would record a(n)     on her balance sheet.

 

Boyd’s Bicycle Sales and Repairs Co. offers a 6-month warranty on all new bicycle purchases. Based on history, Boyd determines that warranty repairs are equal to approximately 2% of sales. During the month, Boyd sales total $20,000. Boyd will record Warranty Expense in the amount of     for the month.

 

Which of the following situations would not be required to be recorded in the financial statements or reported as a note to the financial statements?

 

Perez Co. sells automotive supplies and warranties them for a three-month period. Perez sold $10,000 of supplies during the month and anticipates that warranty repairs for these sales will total $250. The adjusting entry that Perez will make to record the warranty expense will include which of the following? 

 

A     is a probable future payment of assets or services that a company is presently obligated to make as a result of past transactions or events.

 

Bryne Co. sells merchandise and collects a 5% sales tax. The tax is recorded on Bryne’s general ledger as a(n)     account.

 

KRS Co. sells merchandise for $120 and collects sales tax of $12. KRS would record the $12 sales tax with a credit to the Sales Tax     account.

 

Mary's Magazine Sales sells popular magazine subscriptions. During January, Mary collected $1,200 from various customers to provide magazines over the next 12 months. At the end of February, Mary would make an adjusting entry to record one month of magazines subscriptions earned. This transaction would include which of the following entries?

 

On June 1, Grey Co. borrows $15,000 cash from the National Bank by signing a 120-day, 10% interest-bearing note. Grey will record interest during the year totaling    . Using a 360 day year, round your final answer to the nearest whole dollar.

 

A company sells 12-month subscriptions to popular magazines. During the month of May, the company sells $10,000 in magazines, which will start in June. The journal entry to record the sales not yet earned will include a credit to which account? 

 

When recording a liability, a company may not know: (Check all that apply.)

 

The     of a note is the amount that the signer of a note agrees to pay back when it matures, not including interest.

 

Star Co. reported $10,000 of net income during the month of January. Star estimates that it owes income taxes of $2,000 for the month. The month-end adjusting entry to record this estimate would require which of the following entries? (Check all that apply.)

 

Amounts received in advance from customers for future products or services are typically recorded in a liability account called    .

 

On July 1, Scene Co. borrowed $15,000 cash from First Bank by signing a 30-day, 5% interest-bearing note. Scene will record this entry with a credit to Notes Payable in the amount of $__________.

 

On November 1, Lance Co. borrowed $90,000 cash from First Bank by signing a 90-day, 5% interest-bearing note. One December 31, Lance will record an adjusting entry by crediting __________ in the amount of __________.

 

    is the charge for using money (or other assets) loaned from one entity to another.

 

Niwa Co. replaced a $3,000 account payable balance to Fiona Co. with a 60-day, $3,000 note bearing 5% annual interest. Niwa’s entry to record this transaction would include which of the following entries? 

 

On June 1, Sawyer Co. borrowed $5,000 by extending their past-due account payable with a 45-day, 12% interest-bearing note. On July 16, the due date, Sawyer pays the amount due in full. Sawyer would record this payment with a __________ to Interest Expense in the amount of __________.

 

On December 1, Campbell Co. borrowed $10,000 cash from Second Bank by signing a 90-day, 6% interest-bearing note. On December 31, Campbell accrued interest expense of $50. Campbell does not use reversing entries. On March 1, the due date of the note, Campbell will record the payment with debit entries to which of the following accounts?

 

    are amounts owed to suppliers for products or services purchased on credit.

 

Tire Co. collected $2,000 in sales tax during the month of October. The entry that shows the remittance of this sales tax to the state government in November would include a credit to the    account.

 

During December 2017, Marci Lane opens a computer sales store selling new computers and offering a six-month warranty on all new sales. During December, Lane makes three sales totaling $4,000. Lane estimates warranty repairs will total 15% of sales. In January 2018, a customer submits a warranty claim requiring $300 of work. Lane will record a debit to Estimated Warranty Liability in the amount     in January 2018 for the warranty work.

 

During the second quarter of the year, Francisco Co. accrued $8,000 of income taxes. On July 15, Francisco will send in the second quarterly payment. To record this payment, Francisco will enter which of the following entries?

 

Victor’s Vacuum Sales Co. sells high quality vacuums and provides a one-year warranty on all new sales. Based on history, Victor anticipates that 3% of vacuums will be returned at a cost of $30 per vacuum. During the month, Victor sold 100 vacuums for a total of $35,000. At the end of the month, Victor will record     in Warranty Expense.

 

1.
 
 
Coolidge Company owes $1,000 for merchandise inventory purchased from Ross Company during April. The amount owed is now past-due. On June 15, 2015, Coolidge meets with Ross and convinces Ross to accept $400 cash and a 30-day, 10 percent, $600 note payable to replace the account payable. Prepare the June 15 journal entry for Coolidge by selecting the account names and dollar amounts from the drop-down menus.
2.
 
 
On September 1, 2015, Vicario, Inc., borrows $100,000 from First National Bank at 6 percent annual interest. This note is due in 90 days. Prepare the September 1 journal entry for Vicario by selecting the account names and dollar amounts from the drop-down menus.
3.
 
 
Lyon Co. collected $1,200 in sales tax from customers during the month of March. In April, Lyon sent $1200 sales tax to the state government. The entry to record payment to the state would include
4.
 
 
John Grey owns Grey's Snow Plowing. In October, Grey's collects $12000 cash for 6 commercial accounts for which he will provide snowplowing for the entire season. To record this transaction, what will Grey enter?
6.
 
 
As of December 31, Marr, Inc., has accrued benefits to its employees for medical insurance (in the amount of $12,000) and a contribution to a retirement program (at 10% of the employees' $200,000 gross salary). Prepare the December 31 entry for Marr by selecting the account names and dollar amounts from the drop-down menus.
7.
 
 
As of December 31, Bayer, Inc., agrees to provide a bonus of $50,000 to its employees (to be equally shared by all). The bonus will be paid in January. Prepare the December 31 adjusting entry for Bayer by selecting the account names and dollar amounts from the drop-down menus.
8.
 
 
Maas, Inc., sells washers and dryers that include a maximum one-year warranty covering parts. On January 20, 2016, a customer returned a washer for warranty repairs. Maas performs this work by replacing parts costing $16. Prepare the January 20 journal entry for Maas by selecting the account names and dollar amounts from the drop-down menus.
9.
 
 
On December 16, 2015, Carboy, Inc., borrows $120,000 cash from Third National Bank at 9 percent annual interest. The note is due in 45 days. Carboy's year-end is December 31, 2015. Prepare the necessary December 31 adjusting entry for Carboy by selecting the account names and dollar amounts from the drop-down menus.
10.
 
 
On December 15, 2015, Carboy, Inc., borrows $120,000 cash from Third National Bank at 9 percent annual interest. The note is due in 45 days. At December 31, 2015, Carboy records any unpaid interest with an adjusting entry. On January 30, 2016, Carboy pays the principal and interest owed on the bank note.Prepare the January 30 entry by Carboy for the payment (maturity) of the note plus interest by selecting the account names and dollar amounts from the drop-down menus. (Note that the account names must follow the order in the illustration in the text.)
11.
 
 
Bushra Co. replaced a $1000 account payable balance to Elin Co. with a 120-day, $1000 note bearing 8% annual interest. Bushra's entry to record this transaction would include a credit to which account?
12.
 
 
On November 30, 2015, Vicario, Inc., paid the principal and interest owed on a 90-day, 6 percent, $100,000 note to First National Bank that was dated September 1, 2015. Prepare the necessary journal entry for Vicario when this note matures by selecting the account names and dollar amounts from the drop-down menus.
13.
 
 
Lopez Company has a single employee, who earns a salary of $192,000 per year. That employee is paid on the 15th and last day of each month. On January 15, Lopez is subject to the following payroll taxes: FICA-Social Security Taxes (at 6.2% of the first $117,000 each employee earns in the calendar year), FICA-Medicare Taxes (at 1.45%), FUTA (at 0.8% of the first $7,000 each employee earns in the calendar year), and SUTA (at 5.4% of the first $7,000 each employee earns in the calendar year). The journal entry to record the employer's payroll tax expense and related liabilities would include a debit to:
14.
 
 
In order for a contingent liability to be recorded as a journal entry in the financial statements, it must be
15.
 
 
Lopez Company has a single employee. The employee's gross pay is $2,500. After withholding the following amounts from this employee's paycheck: FICA—Social Security Taxes ($155), FICA—Medicare Taxes ($36.25), Federal Income Taxes ($400), State Income Taxes ($25), and Employee Medical Insurance ($100), a check in the amount of $1,783.75, which is the amount of the employee's net pay, is prepared on February 1. Prepare the February 1 journal entry for Lopez by selecting the account names and dollar amounts from the drop-down menus.
16.
 
 
Assume that salaried employees of Mayer, Inc., earn 2 weeks of vacation per year. The salaried employees are paid annual salaries totaling $208,000. Mayer's first payroll of the year is on January 7. Prepare the January 7 journal entry for Mayer by selecting the account names and dollar amounts from the drop-down menus.
17.
 
 
Maas, Inc., sells washers and dryers that include a maximum one-year warranty covering parts. Past experience shows that warranty expense averages about 2 percent of the selling price of each washer and dryer. Net sales totaled $400,000 during the year ending December 31, 2015. Prepare the December 31 adjusting entry for Maas by selecting the account names and dollar amounts from the drop-down menus.
 
 
 
 
 
 
 
 
 
 

1.
ace company borrowed $10,000 from fair rates bank by signing a two-year note payable. ace's operating cycle is 14 months. this note would be considered a ________ ___________ on the balance sheet
 
 
3.
during december 2009, marci lane opens a computer sales store selling new computers and offering a six-month warranty on all new sales. during december, lane makes three sales totaling $4,000. Lane estimates warranty repairs will total 15% of sales. in january 2010, a customer submits a warranty claim requiring $300 of work. lane will record a debit to estimated warranty liability in the amount of $______ in January 2010 for the warranty work
 
 
4.
employers must pay employee taxes in addition to those paid by the employees. which of the following is paid only by the employer
insurance premiums
federal taxes
state taxes
SUTA
FICA
 
 
6.
the formula to compute the times interest earned is income before interest expense and income taxes divided by
 
 
7.
fortiz co. receives $85 for the sale of merchandise with a sale price of $80 and sales tax of $5. The entry to record the $5 sales tax would require a
 
 
8.
a ________ is a seller's obligation to replace or correct a product (or service) that fails to perform as expected within a specified period
 
 
9.
Leo Calvin is required to have ________ taxes withheld from his pay in order to cover the cost of future retirement, disability, and survivor ship and medical expenses
 
 
11.
Niwa co. replaced a $3,000 account payable balance to Fiona Co. with a 60-day, $3,000 note bearing 5% annual interest. Niwa's entry to record this transaction would include a debit/credit to
 
 
12.
the _______ of a note is the amount that a signer of a note agrees to payback when it matures, not including interest.
 
 
13.
on july 1, scene co. borrowed $15,000 cash from First Bank by signing a 30-day, 5% interest-bearing note. scene will record this entry with a credit to Notes Payable in the amount of $
 
 
14.
On June 1, Button Co. borrowed $1,000 cash from National Bank by signing a 120-day, 6% interest-bearing note. Button will record this transaction with a credit to _________ in the amount of _________
 
 
15.
on march 1, young co. $1,000 cash from superior banks by signing a 120-day, 6% interest-bearing note. on june 29, young pays the amount due in full. this entry would be recorded by young with a credit to _____ in the amount of ________-
 
 
16.
on november 1, lance co. borrows $90,000 cash from Fist Bank by signing a 90-day, 5% interest-bearing note. On december 31, lance will record an adjusting entry by crediting ____________ in the amount of __________________
 
 
17.
On November 1, Wright Co. borrowed $20,000 cash from Third Bank by signing a 90-day, 6% interest-bearing note. On December 31, Wright recorded an adjusting entry to interest expense of $200. On January 30, the due date of the note, Wright will record the payment with a debit to Interest Expense in the amount of $
 
 
18.
patel paving collected $1,000 cash in advance from a customer to provide paving services next month. the entry to record this cash receipt would include
 
 
19.
Patel Paving collected $1,000 cash in advance from a customer to provide paving services next month. the entry to record this cash receipt would include debit/credit
 
 
20.
the ratio of income before interest expense divided by interest expense - which reflects the risk of covering interest commitments when income varies - is called the ______ ratio
 
 
21.
the reports that employers are required to prepare to explain how they compute local, state and federal payroll taxes are called ______ reports
 
 
22.
simar sales co. sells and installs kitchen appliances. simar guarantees parts and labor for one year after installation. simar would record potential claims in a(n) __________ account
 
 
23.
star co. reported $10,000 of net income during the moth of January. Star estimates that it owes income taxes of $2000 for the month. the month-end adjusting entry to record this estimate would require debit/credit
 
 
24.
state unemployment taxes imposed on employers in order to provide unemployment benefits to qualified workers are known as
 
 
25.
tire co. collected $2,000 in sales tax during the month of october. the entry that shows the remittance of this sales tax to the state government in November would include a credit to the __________ account
 
 
26.
to compute the amount of taxes withheld from each employee's wages, an employer needs to determine both the employee's wages earned and the employee's number of withholding allowances. the employer will determine the number of withholding allowances using the
 
 
27.
trighton's trailer co. sells all kinds of trailers and provides a one-year warranty on all new trailer sales. Based on history, trighton anticipates that 2% of trailers will be returned and will have a warranty cost of $100 per trailer. during the month, victor sold 300 trailers for a total of $255,000. at the end of the month, trighton will record $_____ in warranty expense
 
 
 
 
 
 
 
 
 
 
 
 

28.
vance co. allows employees to take a two week vacation each year. a newly hired employee will earn $20,800 per year. To account for the two weeks off each year, Dante will accrue $16 in each of the 50 weeks. this accrual will be recorded to which debit/credit accounts
 
 
29.
the wage and tax statement, or ______, is a report that is required to be given to employees by January 31 following the year covered by the report. This report details the employees wages subject to FICA and federal income taxes, along with the amount of these taxes witheld
 
 
30.
when recording a liability, a company may not know:
 
 
31.
which of the following is not a payroll deduction?
FICA taxes
Net Pay
Federal Income Tax
Employee Income Tax
 
 
32.
a written promise to pay a specified amount on a definite future date within one year or the company's operating cycle, whichever is longer, is considered a
 
 
33.
zion co. sells $100 of merchandise and collects $10 sales tax. the sales tax is recorded to which account?
 
 
 

1.
Arnold Co. allows each employee to take two weeks vacation during each year. A newly hired employee will earn annual pay of $31,200. to accuse for the two weeks off each year, Arnold will accrue approximately $_________ to the Vacation Benefits account to each of the 50 weeks.
 
 
2.
Bina Consulting Co. collected $500 from a customer in advance to provide consulting fees for the next two months. The $500 would be recorded with a debit to Cash and a credit to the Unearned Revenues, which is a __________ account.
 
 
3.
Bursha Co. replaced a $1,000 account payable balance to Elin Co. with a 120-day $1,00 note bearing 8% annual interest. Bushra's entry to record this transaction would include a credit to which account?
 
 
4.
During the first quarter of the year, Trina Co. accrued $6,00 of income taxes. On April 15, Trina will send in the first quarterly payment. The entry to record this payment will include a debit to the __________ account.
 
 
5.
During the second quarter of the year, Francisco Co. accrued $8,00 of income taxes. On July 15, Francisco will send in the second quarterly payment. To record this payment, Francisco will enter which of the following entries?
 
 
6.
Employers use a special account for payroll for which of the following reasons?
 
 
7.
Examples of employee voluntary deductions may include all of the following except:

- unemployment taxes
- pension contributions
- charitable giving
- medical premiums
 
 
8.
Fortiz Co. receives $85 for the sale of merchandise with a sales price of $80 and a sales tax of $5. The entry to record the $5 sales tax would require what action?
 
 
9.
In order for a continent liability to be recorded as a journal entry in the financial statements, it must be __________ and reasonably estimable.
 
 
10.
Jorge Lopez worked 40 hours this week and earned $1,000 gross salary. Federal and state taxes and other withholdings totaled $350. Jorge's gross pay totals $__________.
 
 
12.
Obligations not due to be paid within one year or one operating cycle, whichever is longer, are considered to be:
 
 
13.
On December 2, 2010, Wayne Co. borrows $25,000 cash from Secure Bank by signing a 120-day, 6% interest-bearing note. Wayne will record interest expense of __________ on December 31.
 
 
14.
On January 8, Lee Co. borrows $100,000 cash from National Bank by signing a 90-dy, 6% interest-bearing note. On April 8, Lee Co. will pay National Bank a total of $101,500. Principal on the note totals $__________.
 
 
17.
On March 1, Young Co. borrowed $1,00 cash from Superior Bank by signing a 120-day, 6% interest-bearing note. Jone June 29, Young pays the amount due in full. This entry would be recorded by Young with a credit to __________ in the amount of __________.
 
 
19.
On November 1, Wright Co. borrowed $20,000 cash from Third Bank by signing a 90-day , 6% interest-bearing note. On December 31, Wright recorded an adjusting entry to interest expense of $200. On January 30, the due date of the notes, Wright will record the payment with a debit to Interest Expense in the amount of $__________.
 
 
20.
Paid absences that are accrued throughout the year are recorded in the __________ account.
 
 
21.
Simar Sales Co. sells and installs kitchen appliances. Simar guarantees parts and labor for one year after installation. Simar would record potential claims in a(n) __________ account.
 
 
22.
Spot Co. purchases office supplies from Sally Supplies, Inc.. Spot does not pay cash for the purchase, and now owes the amount to Sally. This transaction would typically be recorded in which account in Spot's books?
 
 
23.
Stalz Co. collected $2,500 in sales tax from customers during the month of February. In March, Stallon sends the $2,500 to the state government. The payment to the state would be recorded with a debit to which account?
 
 
 
 
 
 
 
 
 
 
 
 

25.
Teva Co. has current period employee salary expense of $2,000. Employee withholdings total $850. To accrue the current period payroll, Salaries Payable will be __________ in the amount of __________.
 
 
26.
Trighton's Trailer Co. sells all kinds of trailers and provides a one-year warranty on all new trailer sales. Based on history, Trighton anticipates that 2% of trailers will be returned and will have a warranty cost of $100 per trailer. During the month, Victor sold 300 trailers for a total of $255,000. At the end of the month Trighton will record $__________ in warranty expense.
 
 
27.
Vance Co. allows employees to take a two week vacation each year. A newly hired employee will earn $20,800 per year. To account for the two weeks off each year, Dante will accrue $16 in each of the 50 weeks. This accrual will be recorded to which of the following accounts?
 
 
28.
Which of the following items would be considered a current liability?

- wages payable 
- notes payable, due in 3 months
- accounts payable, terms n/30
- notes payable, due in 14 months
 
 
29.
Which of the following situations would required a journal entry to record the continent liability in the financial statements?
 
 
30.
Zilo Co. has accrued employee salary expense of $1,000 which includes employee withholdings that total $300. On payday, Zilo will record the payment with which of the following entries?
 
 
31.
Zion Co. sells $1000 of merchandise and collects $10 sales tax. The sales tax is recorded to which account?
 
 
 

When a company has a current obligation to make a future payment to their supplier due to a shipment of supplies that were received last week, the company would record this transaction with an increase to an asset account and a(n) ________ account.

 

The following items would be considered a current liability

 

Ace Company borrowed $10,000 from Fair Rates Bank by signing a two-year note payable. Ace’s operating cycle is 14 months. This note would be considered a on the balance sheet.

 

A can be recorded, even if there is uncertainty of when to pay, how much to pay, or whom to pay.

 

A liability created by buying goods or services on credit, is typically recorded to.

 

Zion Co. sells $100 of merchandise and collects $10 sales tax. The sales tax is recorded to the account.

 

Fortiz Co. receives $85 for the sale of merchandise with a sales price of $80 and sales tax of $5. The entry for the $5 sales tax would be

 

Stalz Co. collected $2,500 in sales tax from customers during the month of February. In March, Stallon sends the $2,500 to the state government. The payment to the state would be recorded with a debit to the account.

 

Bina Consulting Co. collected $500 from a customer in advance to provide consulting fees for the next two months. The $500 would be recorded with a debit to Cash and a credit to the Unearned Revenues, which is a account.

 

A company sells 12-month popular magazine subscriptions. During the month of May, the company sells $12,000 in magazines, which will start in June. The adjusting entry to record the $1,000 of subscriptions earned in June will include a debit to the.

 

Patel Paving collected $1,000 cash in advance from a customer to provide paving services next month. The entry to record this cash receipt would be.

 

John Grey owns Grey’s Snow Plowing. In October, he collects $12,000 cash for 6 commercial accounts for which he will provide snowplowing for the next three months. John recorded the cash collection as an unearned liability. To record the adjusting entry in November, when $4,000 has been earned, Grey will enter these entries.

 

A written promise to pay a specified amount on a definite future date within one year or the company’s operating cycle, whichever is longer, is considered a 

 

On January 1, Avers Co. borrowed $10,000 cash from Main St. Bank by signing a 60-day, 8% interest-bearing note. On March 1, Avers pays the amount due in full. This entry would be recorded by Avers with a debit to in the amount of 

 

On December 1,2010, Wayne Co. borrows $25,000 cash from Secure Bank by signing a 120-day, 6% interest-bearing note. Wayne will record interest expense of on December 31.

 

On June 1, Button Co. borrowed $1,000 cash from National Bank by signing a 120-day, 6% interest-bearing note. Button will record this transaction with a credit to in the amount of 

 

On January 1, KC Co. borrowed $10,000 cash from Lake St. Bank by signing a 90-day, 8% interest-bearing note. The amount of interest will be 

 

On December 1, Hansen Co. borrowed $100,000 cash from National Bank by signing a 90-day, 6% interest-bearing note. On December 31, Hansen recorded an adjusting entry to record interest expense of $500. On March 1, the due of the note, Hansen will record interest expense as a in the amount of debit interest expense for $1,000.

 

On November 1, Wright Co. borrowed $20,000 cash from the Third Bank by signing a 90-day, 6% interest-bearing note. On December 31, Wright recorded an adjusting entry to interest expense of $200. On January 30, the due date of the note, Wright will record the payment with a debit to Interest Expense in the amount of 

 

Leeroy’s Lawn Mowers offers a one-year warranty on all new mower sales. During 2009, Leeroy sold $200,000 in mowers and accrued $2,000 of related warranty expense. In January 2010, a customer brought in a mower covered under warranty that required $500 in labor. The journal entry for this repair is 

 

The following situations would require a journal entry to record the contingent liability in the financial statements-

 

Cadie Construction Co. signed a note promising to pay a cement supplier $1,000 60-days from now.  This transaction would be recorded as a short-term note payable on the balance sheet.

 

On January 8th, Lee Co. borrows $100,000 cash from National Bank by signing a 90-day, 6% interest-bearing note. On April 8th, Lee Co. will pay National Bank a total of $101,500. The difference between the amount paid back to National Bank of $101,500 and the amount borrowed of $100,000 (or $1,500) represents interest expense.

 

A current liability is an obligation due to be paid or settled within one year or the company’s operating cycle, whichever is longer.

 

On January 1st, Ayers Co. borrowed $10,000 cash from Main St. Bank by signing a 60-day, 8% interest-bearing note. On March 1, Avers pays the amount due in full. This entry would be recorded by Ayers:

 

A company sells 12-month subscriptions to popular magazines. During the month of May, the company sells $10,000 in magazines, which will start in June. The journal entry to record the sale:

 

Ace Co. borrowed $10,000 from Fair Rates Bank by signing a two-year note payable. Ace’s operating cycle is 14 months. This note would be considered a long-term liability on the balance sheet.

 

Bina Consulting Co. collected $500 from a customer in advance to provide consulting fees for the next two months. The $500 would be recorded with a debit to Cash and a credit to Unearned Revenues, which is a liability account.

 

A warranty is a seller’s obligation to replace or correct a product (or service) that fails to perform as expected within a specified period.

 

Pyott Co. sells small appliances and offers warranties on all new sales. Duting the month of December, Pyott’s sales were $30,000 and accrued related warranties totaled $300. During January, a customer made a repair claim under the warranty requiring $200 of labor. The journal entry related to the January repair would include:

 

John Grey owns Grey’s Snow Plowing. In October, he collects $12,000 cash for 6 commercial accounts for which he will provide snowplowing for the next three months. John recorded the cash collection as an unearned liability. To record the adjusting entry in November, when $4,000 has been earned:

 

Vance Co. allows employees to take a two week vacation each year. A newly hired employee will earn $28,000 per year. To account for the two weeks off each year, Dante will accrue $16 in each of the 50 weeks.

 

Harvey Co. has current period employee salary expenses of $800. Employee withholdings total $300. The entry to accrue current period payroll will include a credit to Salaries Payable in the amount of

 

Jorge Lopez worked 40 hours this week and earned $1,000 gross salary. Federal and state taxes and other withholdings totaled $350. Jorge’s gross pay totals $1,000. Its net pay is

 

Camelot Co. expects that net income before bonuses for the year will be $100,000. At year-end, Camelot will accrue 2% of net income for employee bonuses to be paid in January. The 12/31 entry will require a debit to the Employee Bonus Expense account in the amount of

 

Arnold Co. allows each employee to take two weeks’ vacation during each year. A newly hired employee will earn annual pay of $31,200. To accrue for the two weeks off each year, Arnold will accrue approximately to the Vacation Benefits account in each of the 50 weeks.

 

Zilo Co. has accrued employee salary expense of $1,000 which includes employee withholdings that total $300. On payday, Zilo will record the payment with the following entries:

 

On January 1, KC Co. borrowed $10,000 cash from Lake St. Bank by signing a 90-day, 8% interestbearing note. How much interest will result from this note?

 

Victor’s vacuum sales co. sells high quality vacuum and provide a one -year warranty on all new sales. Based on history, Victor anticipates that 3% of vacuums will be returned at a cost of $ 30 per vacuum. During the month, Victor sold 100 vacuum for a total of $ 35000. At the end of the month, Victor will in warranty Expense 100x0.3xx3=$90

 

John Grey owns Grey’s snow plowing . In October, he collects $12000 cash for 6 commercial accounts for which he will provide snowplowing for the next 3 months. John recorded the cash collection as an unearned liability. To record the adjusting entry in 11 , when $ 4000 has been earned; 

 

Bina cosulting co. collected $ 500 from a customer in advance to provide consulting fees for the next two months. The $500 would be recorded with a debit to cash and a credit to the Unearned Revenue, which is a account

 

Handy Holly Co. provides a variety of household repairs and warranties her work for a six-month period. Holly provided $13,000 of service fees during the month and anticipates that warranty repairs for these sales will total $400. The entry that Holly will make to record the estimated warranty expense will include a credit which account?

 

During the second quarter of the year, Francisco Co. accrued $8,000 of income taxes. On July 15, Francisco will send In the second quarterly payment. To record this payment, Francisco wlll enter which of the following entries? (Check all that apply.)

 

when a company has a current obligation to make a future payment to their supplier due to a shipment of supples that were received last week, the company would record this transaction with an increase to an asset account and a 

 

Which of the following items would be considered a current liability? {Check all that apply.)

 

obligations not due to be paid within one year or the operating cycle whichever is longer,

 

in order for a contingent liability to be recorded in the financial statements it must be and reasonably estimable

 

Simar sales co sells and installs kitchen appliances. Simar guarantees parts and labor for one year after installation. Simar would record potential claims 

 

Fortiz Co. receives $85 for the sale of merchandise with a sales price of $80 and sales tax of $5. The entry to record the $5 sales tax would require which of the following?

 

On March 1, Young Co. borrowed $1,000 cash from Superior Bank by signing a 120-day, 6% interestbearing note. On June 29, Young pays the amournt due In full. This entry would be recorded by Young with a credit to __ In the amount of __

 

Zion Co. sells $100 of merchandise and collects $10 sales tax. The sales tax is recorded to which account?

 

A contingent liability can be ignored (not recorded in the financial statements or notes to the financial statements) if it is considered to be (probable/reasonably possible/remote) remote possibility.

 

Patel Paving collected $1,000 cash in advance from a customer to provide paving services next month. The entry to record this cash receipt would include the following entries? (Check all that apply.)

 

Employers often withhold other amounts from employees' earnings which arise from employee requests, contracts, unions, or other agreements. These withholdings are called employee ____ and include items such as medical premiums.

 

Employee benefits that are paid by the employer are recorded in the Employee 

 

employers are required to prepare and submit payroll report to explain how they compute which of the following taxes?

 

A payroll shows the pay period dates, hours worked, gross pay, deductions, and net pay of each employee for each pay period.

 

Employers use a special account for payroll for which of the following reasons? (Check all that apply.)

 

Jorge Lopez worked 40 hours this week and earned $1,000 gross salary. Federal and state taxes and other withholdings totaled $350. Jorge's gross pay 

 

The federal government require that employers are taxed on employee wages to provide unemployment benefits to qualified. These taxes are known as FUTA

 

The reports that employers are required to prepare to explain how they compute local, state and federal payroll taxes are 

 

Zito Co. has accrued employee salary expense of $1,000 which Includes employee withholdings that total $300. On payday, Zilo will record the payment with which of the following entries? (Check all that apply.)

 

Employers must pay employee taxes in addition to those paid by the employees. Which of the fol lowing is paid only by the employer?

 

Which of the following items are considered employee benefits? (Check all that apply.)

 

Gross pay minus all deductions-including federal and state taxes, FICA and any voluntary deductions-equals pay.

 

Employer taxes, such as SUTA, are recorded with a debit to Employer Tax Expense and a credit to SUTA (expense/payable) until payments are submitted to the state.

 

Which of the following liabilities could be a multi-period known liability? (Check all that apply.)

 

State unemployment taxes imposed on employers in order to provide unemployment benefits to qualified workers are known as (use acronym)

 

amounts with help from an employee's gross pay are called: 

 

Arnold Co. allows each employee to take two weeks vacation during each year. A newly hired employee will earn annual pay of $31,200. To accrue for the two weeks off each year, Arnold will accrue approximately to the Vacation Benefits account in each of the 50 weeks.