Chapter 9 Accounting for Current Liabilities

Jorge Lopez worked 40 hours this week and earned $1,000 in total compensation. Federal and state taxes and other withholdings totaled $350. Jorge's gross pay totals $ P.352 Gross pay

$1,000

Sheldon has a $15,000 liability for a machine that has an interest rate of 10%. The interest expense for one year is? P. Interest expense

$1,500 $15,000 x .10 x 360/360 = $1,500

Winn Co. signs a 60 day note payable for a $15,000 copy machine with an interest rate of 8%. Winn will record total interest expense of P. 349 Note Given to Extend Credit Period

$200 $15,000 x .08 x (60/360) = $200.

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.

$400

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.

$90 100 x .03 x $30 = $90

On January 8, Lee Co. borrows $100,000 cash from National Bank by signing a 90-day, 6% interest note. On April 8, Lee Co. will pay National Bank a total of $101,500. Principal on the note totals $ P. 350 Note Given to Borrow from Bank

100000

On January 8, Lee Co. borrows $100,000 cash from National Bank by signing a 90-day, 6% interest note. On April 8, Lee Co. will pay National Bank a total of $101,500. Principal on the note totals $ P.350 Note Given to Borrow from Bank

100000

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 $ P. 350 Note Given to Borrow from Bank

15,000

Jorge Lopez worked 40 hours this week and earned $1,000. Federal and state taxes, and other withholdings totaled $350. Jorge's net pay totals $ P. 352 Net pay

650 Net pay, or take-home pay, is gross pay minus all deductions.

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? P. 349 Accounts Payable

Accounts Payable

________ are amounts owed to suppliers for products or services purchased on credit. 应付账款是因赊购产品或服务而欠供应商的款项。 P. 349 Accounts Payable

Accounts payable (or trade accounts payable) Wages payable Unearned fees Prepaid supplies Supplies expense

On March 1, Young Co. borrowed $1,000 by extending their past-due account payable with a 120-day, 6% interest-bearing note. On June 29, the due date, Young pays the amount due in full. This entry would be recorded by Young with a credit to _____ in the amount of ______. P. 350 Note Given to Borrow from Bank

Cash; $1,020 Interest is computed for 120 days. $1,000 x .06 x (120/360) = $20. Cash will be credited for $1,000 + 20. Notes payable will be debited for $1,000. 因为有从银行借钱，所以会有利息。

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? P. 349 Note Given to Extend Credit Period

Debit to Accounts Payable Credit to Notes Payable Credit to Cash(❌) 因为Accounts Payable replace whole Notes Payable，所以没有cash的项目

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. P. Warranty Liability

Estimated Warranty Liability

The Federal Insurance Contributions Act provides retirement, disability, survivorship, and medical benefits to qualified workers. Laws require employers to withhold _____ taxes from employees' pay to cover costs of the system. P. 352 Federal Insurance Contributions Act (FICA) taxes

FICA

Leo Calvin is required to have ______ taxes withheld from his pay in order to cover the cost of future retirement, disability, survivorship and medical benefits. P.352 Social Security taxes

FICA: Federal Insurance Contributions Act taxes SUTA: SUTA is an employer expense. FUTA: FUTA is an employer expense. WICA: This is a made up response.

Federal government taxes implemented on employers in order to provide unemployment benefits to qualified workers are known as (use acronym) P. 353 Federal Unemployment Tax Act (FUTA)

FUTA: Federal Unemployment Tax Act

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. False P. 359 Uncertainties That Are Not Contingencies

False contingent liabilities cannot be recorded for future events.

Which of the following situations is not a contingent liability? 以下哪种情况不属于或有负债？ P. 359 Uncertainties That Are Not Contingencies

Future natural disaster

Gross pay

Gross pay is the total compensation an employee earns including wages, salaries, commissions, bonuses, and any compensation earned before deductions such as taxes.

On January 8, Lee Co. borrows $100,000 cash from National Bank by signing a 90-day, 6% interest note. On April 8, 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 expense. P. 350 Note Given to Borrow from Bank The difference between the amount borrowed and the amount repaid is interest.

Interest

is the difference between the amount borrowed and the amount repaid. P.350 Note Given to Borrow from Bank

Interest

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 (debit/credit) _______ to Interest Expense in the amount of _______. P. 350 Note Given to Borrow from Bank

Interest Expense is debited for $75 computed as $5,000x.12x(45/360).

Which of the following items are considered employee benefits?

Medical insurance Pension plans

Gross pay minus all deductions—including federal and state taxes, FICA and any voluntary deductions equals pay. P. 352 Net pay

Net

Which of the following items is not a payroll deduction? P. 352 Payroll deductions

Net pay

Net pay

Net pay is the amount payable to the employees after deductions such as federal, state and local taxes and other voluntary deductions.

Bushra Co. replaced a $1,000 account payable balance to Elin Co. with a 120-day, $1,000 note bearing 8% annual interest. Bushra's entry to record this transaction would include a credit to which account? P.349 Note Given to Extend Credit Period

Notes Payable

Bushra Co. replaced a $1,000 account payable balance to Elin Co. with a 120-day, $1,000 note bearing 8% annual interest. Bushra's entry to record this transaction would include a credit to which account? P. 349 Note Given to Extend Credit Period

Notes Payable This is an accounts payable which is being replaced with a note payable, so Notes Payable is credited to increase it.

Which of the following liabilities could be a multi-period known liability? (Check all that apply.) P. 355 Multi-Period Known Liabilities These often include unearned revenues and notes payable.

Notes Payable Unearned Subscription Revenues Wages Payable: Wages payable are considered current liabilities and not multi-period liabilities which occur over multiple periods. Accounts Payable: Accounts payable are due within 30 days and so are considered current liabilities and not multi-period liabilities which occur over multiple periods.

On January 1, Avers Co. borrowed $10,000 by extending their past-due account payable with a a 60-day, 8% interest-bearing note. On March 1, the due date, Avers pays the amount due in full. This entry would be recorded by Avers with a debit to (Accounts Payable/Notes Payable/Cash)_____ in the amount of _______. P.350 Note Given to Borrow from Bank

Notes Payable; $10,000 Notes Payable will be debited for $10,000. Cash will be credited for $10,800.

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 ______.

Notes Payable; $1,000

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. The March 1 entry would be recorded by Avers with a debit to (Accounts Payable/Notes Payable/Cash)_____ in the amount of _______. P. 350 Note Given to Borrow from Bank

Notes Payable; $10,000

State unemployment taxes imposed on employers in order to provide unemployment benefits to qualified workers are known as (use acronym) P. 353 State Unemployment Tax Act (SUTA)

SUTA

State unemployment taxes imposed on employers in order to provide unemployment benefits to qualified workers are known as: P. 353 State Unemployment Tax Act (SUTA)

SUTA FUTA relates to Federal unemployment benefits. SUTA relates to statement unemployment benefits.

The federal government requires that employers are taxed on employee wages to provide unemployment benefits to qualified workers. These taxes are known as: P. 353 Federal Unemployment Tax Act

SUTA: State Unemployment Tax Act FICA: Federal Insurance Contributions Act SICA: This is a made up account name. FUTA: Federal Unemployment Tax Act

Zion Co. sells $100 of merchandise and collects $10 sales tax. The sales tax is recorded to which account? P. 349 Sales Taxes Payable

Sales tax payable Prepaid sales tax Sales tax expense Sales tax payable

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? P. 358 Contingent Liabilities

The liability is remote and estimated to be $30,000.

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

Unearned Revenues Prepaid Expense Revenues Earned Accounts Payable

Employers must pay employee taxes in addition to those paid by the employees. Which of the following is paid only by the employer? P. 353 Employer Payroll Taxes

Unemployment

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

Unemployment Insurance premiums FICA Federal taxes State taxes

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. P. 356 Vacation Benefits

Vacation Benefits Payable

Known liabilities would include:

accounts payable notes payable payroll obligations sales taxes unearned revenues

Employee ________ are perks that are provided in addition to salaries and wages, such as all or part of medical, dental, life and disability insurance. P. 356 Health and Pension Benefits

benefits

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

bonus plan

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: P. 356 Bouns Plans

bonus plan

Employee Voluntary Deductions include:

charitable giving medical life insurance premiums pension contributions union dues

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. P. 359 Applying Rules of Contingent Liabilities

contingent

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

current liability

Amounts withheld from employee's earnings for employee income tax is considered a _____ by the employer until the government is paid. P. 353 Employee Income Tax Until the government is paid, withholdings are reported as a current liability on the employer's balance sheet.

current liability current asset long-term asset long-term liability

On June 1, Sawyer Co. borrowed $5,000 cash from Crystal Bank by signing a 45-day, 12% interest-bearing note. On July 16, Sawyer pays the amount due in full. Sawyer would record this payment with a (debit/credit) _______ to Interest Expense in the amount of _______. P. 350 Note Given to Borrow from Bank

debit; $75 Interest expense is debited for $75 computed as $5,000x.12x(45/360). The credit is to Cash for $5,075.

Unemployment taxes are examples of (employee/employer) taxes.

employer

Unemployment taxes are examples of (employee/employer) taxes. P. 353 Employer Payroll Taxes Employers must pay payroll taxes in addition to those required of employees. Employer taxes include FICA and unemployment taxes.

employer

A known obligation of an uncertain amount that can be reasonably合理地 estimated is called a(n) .liability. P. 355 estimated liability

estimated

A(n) ______ liability is a known obligation that is of an uncertain amount but that can be reasonably estimated. P. 355 Estimated liability

estimated

_______ is(are) the total compensation an employee earns including wages, salaries, commissions, bonuses, and any compensation earned before deductions such as taxes. P. 352 Gross pay

gross pay

A measurable obligation arising from agreements, contracts, or laws is called a liability. P. 348 Known liabilities

known

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. P. 347 liability

liability

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(n) (asset/liability/equity) account. P. 349 Unearned Revenues

liability

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. P. 347 liability

liability

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

liability asset liability expense

Unearned subscription revenues that extends over multiple periods is an example of a _______ known liability. P. Multi-Period Known Liabilities This is a multi-period liability because the unearned subscription revenue will extend over multiple periods.

multi-period

Employee income tax depends on: (Check all that apply). P. 352 Employee Income Tax

number of employee withholding allowances 津贴 employee's income

A potential legal claim is recorded P. 359 Applying Rules of Contingent Liabilities

only if payment for damages is probable and the amount can be reasonably estimated.

Amounts withheld from an employee's gross pay are called: P. 352 Payroll deductions

payroll deductions

Amounts withheld from an employee's gross pay are called: P. 352 Payroll deductions, or withholdings

payroll deductions

The of a note is the amount that the signer of a note agrees to pay back when it matures, not including interest. P. 350 Note Given to Borrow from Bank

principal or face value

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. P. 358 Accounting for Contingent Liabilities

probable

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. P. 349 Short-Term Notes Payable

short-term note payable

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 __________. P.349 Short-Term Notes Payable

short-term note payable short-term account payable long-term note receivable long-term note payable long-term account payable short-term note receivable

Examples of employee voluntary deductions may include all of the following except:

unemployment taxes. charitable giving. pension contributions. medical premiums.

Paid absences offered to employees are called benefits.

vacation

Employers often withhold 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. P. 353 Employee Voluntary Deductions

voluntary deductions

A known liability is a measurable obligation arising from agreements, contracts, or laws. Known liabilities would include all of the following items, except: P. 348 Known liabilities

warranties保证书

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

warranty