Accounting Chapter 10

Assuming a 360-day year, when a $50,000, 90-day, 9% interest-bearing note payable matures, total payment will be a. $51,125 b. $54,500 c. $1,125 d. $4,500

A

The journal entry used to record the issuance of a discounted note for the purpose of borrowing funds for the business is a. debit Cash and Interest Expense; credit Notes Payable b. debit Cash and Interest Payable; credit Notes Payable c. debit Accounts Payable; credit Notes Payable d. debit Notes Payable; credit Cash

A

When a borrower receives the face amount of a discounted note less the discount, the amount received is known as a. the note proceeds b. the note discount c. the note deferred interest d. the note principal

A

Which of the following taxes are employers required to withhold from employees? a. FICA tax b. FICA tax, and state and federal unemployment tax c. state unemployment tax d. federal unemployment tax

A

An employee receives an hourly wage rate of $15, with time and a half for all hours worked in excess of 40 during the first week of the calendar year. Payroll data for the first week of the calendar year are as follows: hours worked, 48; federal income tax withheld, $120; social security tax rate, 6%; and Medicare tax rate, 1.5%; state unemployment compensation tax, 3.4% on the first $7,000; federal unemployment compensation tax, 0.8% 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

B

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 a. 6.25% b. 10.00% c. 10.26% d. 9.75%

B

Assuming a 360-day year, the interest charged by the bank, at the rate of 6%, on a 90-day, discounted note payable of $100,000 is a. $6,000 b. $1,500 c. $500 d. $3,000

B

Current liabilities are a. due and receivable within one year b. due and to be paid out of current assets within one year c. due, but not payable for more than one year d. payable if a possible subsequent event occurs

B

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? a. $102.00 b. $127.50 c. $96.00 d. $25.50

B

Each year there is a ceiling for the amount that is subject to all of the following except a. social security tax b. federal income tax c. federal unemployment tax d. state unemployment tax

B

Martin Jackson receives an hourly wage rate of $30, with time and a half for all hours worked in excess of 40 hours during a week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $350; social security tax rate, 6.0%; and Medicare tax rate, 1.5%. What is the net amount to be paid to Jackson? a. $1,470.00 b. $1,009.75 c. $1,097.95 d. $460.25

B

Martinez Co. borrowed $50,000 on March 1 of the current year by signing a 60-day, 9%, interest-bearing note. Assuming a 360-day year, when the note is paid on April 30, the entry to record the payment should include a a. debit to Interest Payable for $750 b. debit to Interest Expense for $750 c. credit to Cash for $50,000 d. credit to Cash for $54,500

B

On January 5, Thomas Company, a calendar-year company, issued $1,000,000 of notes payable, of which $250,000 is due on January 1 each of the next four years. The proper balance sheet presentation on December 31 is a. Current Liabilities, $1,000,000 b. Current Liabilities, $250,000; Long-Term Debt, $750,000 c. Long-Term Debt, $1,000,000 d. Current Liabilities, $750,000; Long-Term Debt, $250,000

B

Payroll taxes levied against employees become liabilities a. the first of the following month b. when the payroll is paid to employees c. when data are entered in a payroll register d. at the end of an accounting period

B

Sadie White 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; social security tax rate, 6.0%; and Medicare tax rate, 1.5%. What is the net amount to be paid to White? a. $1,443 b. $1,143 c. $1,260 d. $1,560

B

Taylor Bank lends Guarantee Company $150,000 on January 1. Guarantee Company signs a $150,000, 8%, 9-month, interest-bearing note. The entry made by Guarantee Company on January 1 to record the proceeds and issuance of the note is a. Interest Expense 12,000 Cash 138,000 Notes Payable 150,000 b. Cash 150,000 Notes Payable 150,000 c. Cash 162,000 Interest Expense 12,000 Notes Payable 150,000 d. Notes Payable 120,000 Interest Payable 7,200 Cash 120,000 Interest Expense 7,200

B

The entry to record the payment of net pay would include a a. debit to salaries payable for $14,000 b. debit to salaries payable for $9,350 c. credit to salaries expense for $9,350 d. credit to salaries payable for $9,350

B

The journal entry used to record the issuance of an interest-bearing note for the purpose of borrowing funds for the business is a. debit Accounts Payable; credit Notes Payable b. debit Cash; credit Notes Payable c. debit Notes Payable; credit Cash d. debit Cash and Interest Expense; credit Notes Payable

B

The journal entry used to record the payment of a discounted note is a. debit Notes Payable and Interest Expense; credit Cash b. debit Notes Payable; credit Cash c. debit Cash; credit Notes Payable d. debit Accounts Payable; credit Cash

B

Which is not a determinate in calculating federal income taxes withheld from an individual's pay? a. marital status b. types of earnings c. gross pay d. number of withholding allowances

B

Which of the following will have no effect on an employee's take-home pay? a. social security tax b. unemployment tax c. marital status d. number of exemptions claimed

B

A current liability is a debt that is reasonably expected to be paid a. between 6 months and 18 months b. out of currently recognized revenues c. within one year d. out of cash currently on hand

C

Anderson Co. issued a $50,000, 60-day, discounted note to National Bank. The discount rate is 6%. At maturity, assuming a 360-day year, the borrower will pay a. $53,000 b. $50,500 c. $50,000 d. $49,500

C

Assuming a 360-day year, when a $20,000, 90-day, 5% interest-bearing note payable matures, total payment will be a. $21,000 b. $1,000 c. $20,250 d. $250

C

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 a. $49,750 b. $47,000 c. $49,000 d. $51,000

C

Lee Company has the following information for the pay period of December 15-31: Gross payroll $16,000 Federal income tax withheld $4,000 Social security rate 6% Federal unemployment tax rate 0.8% Medicare rate 1.5% State unemployment tax rate 5.4% Assuming no employees are subject to ceilings for taxes on their earnings, Salaries Payable would be recorded for a. $16,000 b. $9,808 c. $10,800 d. $11,040

C

Most employers are levied a tax on payrolls for a. sales tax b. medical insurance premiums c. federal unemployment compensation tax d. union dues

C

On July 8, Jones Inc. issued an $80,000, 6%, 120-day note payable to Miller Company. Assume that the fiscal year of Jones ends July 31. Using a 360-day year, what is the amount of interest expense recognized by Jones in the current fiscal year? When required, round your answer to the nearest dollar. a. $700 b. $4,200 c. $307 d. $1,400

C

On June 1, Davis Inc. issued an $84,000, 5%, 120-day note payable to Garcia Company. Assume that the fiscal year of Garcia ends June 30. Using a 360-day year, what is the amount of interest revenue recognized by Garcia in the following year? When required, round your answer to the nearest dollar. a. $700 b. $1,600 c. $1,062 d. $4,200

C

On June 8, Smith Technologies issued a $75,000, 6%, 140-day note payable to Johnson Company. What is the due date of the note? a. October 28 b. October 27 c. October 26 d. October 25

C

On June 8, Williams Company issued an $80,000, 5%, 120-day note payable to Brown Industries. Assuming a 360-day year, what is the maturity value of the note? When required, round your answer to the nearest dollar. a. $82,600 b. $84,000 c. $81,333 d. $88,200

C

Proper payroll accounting methods are important for a business for all the reasons below except a. good employee morale requires timely and accurate payroll payments b. payroll is subject to various federal and state regulations c. to help a business with cash flow problems by delayed payments of payroll taxes to federal and state agencies d. payroll and related payroll taxes have a significant effect on the net income of most businesses

C

The journal entry to record the payment of an interest-bearing note is a. debit Cash; credit Notes Payable b. debit Accounts Payable; credit Cash c. debit Notes Payable and Interest Expense; credit Cash d. debit Notes Payable and Interest Receivable; credit Cash

C

Thomas Martin receives an hourly wage rate of $40, with time and a half for all hours worked in excess of 40 hours during a week. Payroll data for the current week are as follows: hours worked, 48; federal income tax withheld, $350; social security tax rate, 6.0%; and Medicare tax rate, 1.5%. What is the gross pay for Martin? a. $449 b. $1,730 c. $2,080 d. $1,574

C

Which of the following is required to be withheld from employee's gross pay? a. both federal and state unemployment compensation taxes b. only federal unemployment compensation tax c. only federal income tax d. only state unemployment compensation tax

C

Which of the following taxes would be deducted in determining an employee's net pay? a. FUTA taxes b. SUTA taxes c. FICA taxes d. all are correct

C

Current liabilities are due a. but not receivable for more than one year b. but not payable for more than one year c. and receivable within one year d. and payable within one year

D

Notes may be issued a. when assets are purchased b. to creditors to temporarily satisfy an account payable created earlier c. when borrowing money d. for all of these

D

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? a. Rodriguez is the creditor and credits Accounts Receivable b. Wilson is the creditor and debits Accounts Receivable c. Wilson is the borrower and credits Accounts Payable d. Rodriguez is the borrower and debits Accounts Payable

D

The amount of federal income taxes withheld from an employee's gross pay is recorded as a(n) a. payroll expense b. contra account c. asset d. liability

D

The current portion of long-term debt should a. be classified as a long-term liability b. not be separated from the long-term portion of debt c. be paid immediately d. be reclassified as a current liability

D

The journal entry to record the conversion of a $6,300 accounts payable to a note payable would be a. Cash 6,300 Notes Payable 6,300 b. Notes Receivable 6,300 Notes Payable 6,300 c. Notes Payable 6,300 Cash 6,300 d. Accounts Payable 6,300 Notes Payable 6,300

D

The journal entry to record the issuance of a note for the purpose of converting an existing account payable would be a. debit Cash; credit Accounts Payable b. debit Accounts Payable; credit Cash c. debit Cash; credit Notes Payable d. debit Accounts Payable; credit Notes Payable

D

The total earnings of an employee for a payroll period is referred to as a. take-home pay b. pay net of taxes c. net pay d. gross pay

D

Which of the following are included in the employer's payroll taxes? a. SUTA taxes b. FUTA taxes c. social security taxes d. all are included in employer taxes

D

Which of the following would be used to compute the federal income taxes to be withheld from an employee's earnings? a. FICA tax rate b. wage and tax statement c. FUTA tax rate d. withholding table

D

Which of the following would most likely be classified as a current liability? a. two-year notes payable b. bonds payable c. mortgage payable d. unearned rent

D