Chapter 9 learnsmart

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 $__________

$15,000

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

10,000*.08*90/360= 200

On December 1, Hansen Co. borrows $100,000 cash from National Bank by signaling a 90-day, 6% interest-bearing note. On December 31, Hansen will record an adjusting entry by debiting interest expense in the amount of ____________.

100,000*.06(30/360)=$500

Jorge Lopez worked 40 hours this week and earned $1,000 gross salary. Federal and state taxes and other withholding totaled $350. Jorges gross pay totals $_________________

1000

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 $____________

20,000*.06*30/360=100

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 which of the following?

Credit to Sales Tax Payable

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

Current

The federal Social Security system provides retirement, disability, survivor ship, and medical benefits to qualified workers. Laws require employers to withhold ______ taxes from employees' pay to cover costs of the system.

FICA

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

FUTA

On November 1, Lance Co. borrows $90,000 cash from First 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 ______________.

Interest Payable; $750 $90,000*.05*(60/360)=$750

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?

Notes Payable

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 _______

Notes payable; $10,000

Employer taxes, such as SUTA, are recorded with a debit to Employer Tax Expense and a credit to SUTA _________ until payments are submitted to the state.

Payable

In order for a contingent liability to be recorded as a journal entry in the financial statement, it must be __________ and reasonably estimable.

Probable

State employment taxes imposed on employers in order to provide unemployment benefits to qualified workers are known as

SUTA

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

The principal is 100,000

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

accounts payable

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 ______ to interest Expense in the amount of __________.

debit; 75

FICA and unemployment taxes are examples of _______________ taxes

employer

On January 8, Lee Co. borrows $100,000 cash from National Bank by signing a 90-day, 6% interest-bearing 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.

interest

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.

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

Brina 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)________________ account.

liabilty

Obligations not due to be paid within one year or one operating cycle, whichever is longer, are considered to be:

long-term liabilites

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 ______ on the balance sheet.

long-term liability

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

payable

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

principal

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 ____________.

short-term note payable

Employers often withhold other amounts form employees' earnings which arise from employee request, contracts, unions, or other agreements. These with holdings are called employee __________ and include items such as medical premiums.

voluntary deductions

Lyon Co. collected $1,200 in sales tax from customers during the month of March. In April, Lyon sent the $1,200 sales tax to the state government. The entry to record payment to the state would include which of the following?

~Credit to Cash ~Debit to Sales Tax Payable

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?

~Credit to notes payable ~Debit to accounts payable

John Grey owns Grey's Snow Plowing. In October, Grey's collects $12,000 cash for 6 commercial accounts for which he will provide snowplowing for the entire season. To record this transaction, Grey will enter which of the following entries?

~Debit cash ~Credit to Unearned Plowing Revenue

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

~Debit to Salaries Payable for $700 ~Credit to cash for $700

Mary's Magazine sales sells popular magazine subscription. 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 adjusting entry to record one month of magazines subscriptions earned. This transaction would include which of the following entries?

~Debit to Unearned Subscriptions ~Credit to Subscriptions Earned

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?

~Debit to cash ~Credit unearned paving fees

Which of the following represent reasonably possible contingent liabilities?

~Debt guarantees ~potential legal claims

Which of the following is not a payroll deduction?

~Net pay

Which of the following liabilities could be a multi-period known liability?

~Unearned Subscriptions Revenues ~Notes Payable

Woods Co. has a note payable due in monthly installments over the next five years. This note will be reported under which of the following categories of the balance sheet.

~long-term liabilities ~current liabilities

When recording a liability, a company may not know

~whom to pay ~when to pay ~how much to pay