Acct 210 ch.9

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. True false question. True eason: Contingent liabilities cannot be recorded for future events. False

False

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 ______. Multiple choice question. Cash; $1,000 Notes Payable; $1,020 Cash; $1,020 Notes Payable; $1,000 Cash; $1,060 Notes Payable; $1,060

Notes Payable; $1,000

Employers must pay employee taxes in addition to those paid by the employees. Which of the following is paid only by the employer? Multiple choice question. State taxes FICA SUTA Insurance premiums Federal taxes

SUTA

Paid absences that are accrued throughout the year are recorded in the _____________ account. Multiple choice question. Employee Benefit Expense Vacation Benefit Expense Wages Expense

Vacation Benefit Expense

A(n) ______ liability is a known obligation that is of an uncertain amount but that can be reasonably estimated. Multiple choice question. multi-period estimated unreal uncertain

estimated

On December 1, 20xx, 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. Multiple choice question. $375 Reason: On 12/31, 30 days of interest must be accrued. $25,000 x .06 x (30/360)=$125. $1,500 Reason: On 12/31, 30 days of interest must be accrued. $25,000 x .06 x (30/360)=$125. $125 $500 Reason: On 12/31, 30 days of interest must be accrued. $25,000 x .06 x (30/360)=$125.

$125

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? Multiple choice question. $8,000 Reason: $10,000x.08x(90/360)=$200 $800 Reason: $10,000x.08x(90/360)=$200 $200 $80 Reason: $10,000x.08x(90/360)=$200

$200

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? Multiple choice question. Unearned Fees Wages Payable Accounts Receivable Accounts Payable

Accounts Payable

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 $ ___________.

Blank 1: 1000 or 1,000

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 $ _____________ .

Blank 1: 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 $ ____________.

Blank 1: 15000

On June 1, Grey Co. borrows $15,000 cash from 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.

Blank 1: 500

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.

Blank 1: 600

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 $ _____________.

Blank 1: 650

Federal government taxes implemented on employers in order to provide unemployment benefits to qualified workers are known as (use acronym) __________.

Blank 1: FUTA

___________________ is the difference between the amount borrowed and the amount repaid.

Blank 1: Interest

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

Blank 1: SUTA

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

Blank 1: accounts Blank 2: payable

A ____________liability is a liability due to be paid or settled within one year or the company's operating cycle, whichever is longer.

Blank 1: current or short-term

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

Blank 1: employer

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

Blank 1: estimated

Rachel Ryder is an employee working at Brand-Mart. Rachel earns $35,000 per year and claims three withholding allowances. The amount withheld from her paycheck, using this information, is called federal ________ taxes.

Blank 1: income

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

Blank 1: 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.

Blank 1: 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.

Blank 1: liability

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

Blank 1: net

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

Blank 1: payroll

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

Blank 1: principal

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

Blank 1: register

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

Blank 1: warranty

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.) Multiple select question. Debit to Unearned Paving Fees Debit to Cash Debit to Paving Fees Earned Credit to Unearned Paving Fees Credit to Paving Fees Earned Credit to Cash

Debit to Cash Credit to Unearned Paving Fees

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.) Multiple select question. Credit to Income Tax Expense Reason: Credit Income Taxes Payable Debit to Income Taxes Payable Reason: Debit Income Tax Expense Debit to Income Tax Expense Debit to Cash Reason: Debit Income Tax Expense Credit to Income Taxes Payable Credit to Cash Reason: Credit Income Taxes Payable

Debit to Income Tax Expense Credit to Income Taxes Payable

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? Multiple choice question. No journal entry is necessary until the repair is performed. Warranty Expense Repair Parts and Labor Expense Estimated Warranty Liability

Estimated Warranty Liability

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. Multiple choice question. Miscellaneous Repairs Expense Customer Satisfaction Estimated Warranty Liability

Estimated Warranty Liability

Leo Calvin is required to have ______ taxes withheld from his pay in order to cover the cost of future retirement, disability, and survivorship and medical expenses. Multiple choice question. WICA Reason: This is a made up response. FUTA Reason: FUTA is an employer expense. FICA SUTA Reason: SUTA is an employer expense.

FICA

The federal Social Security system 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. Multiple choice question. FICA WICA AAA SUTA

FICA

_______ is(are) the total compensation an employee earns including wages, salaries, commissions, bonuses, and any compensation earned before deductions such as taxes. Multiple choice question. Gross pay Net pay Reason: Net pay is the amount payable to the employees after deductions such as federal, state and local taxes and other voluntary deductions. Hourly rate Payroll deductions

Gross pay

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. Multiple choice question. Tax Expense Cash Income Taxes Payable Net Income Payable

Income Taxes Payable

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 _______. Multiple choice question. Notes Payable; $10,000 Notes Payable; $10,800 Reason: Notes Payable will be debited for $10,000. Cash will be credited for $10,800. Cash; $10,800 Cash; $10,000 Cash; $10,133 Notes Payable; $10,133 Reason: Notes Payable is debited for the original amount of $10,000. The interest is recorded separately in the Interest Revenue account.

Notes Payable; $10,000

Which of the following items would be considered a current liability? (Check all that apply.) Multiple select question. Notes payable, due in 3 months Wages payable Accounts payable, terms n/30 Notes payable, due in 14 months

Notes payable, due in 3 months Wages payable Accounts payable, terms n/30

Which of the following items are considered employee benefits? (Check all that apply.) Multiple select question. Pension plans Medical insurance Employee withholdings Reason: Medical insurance and Pension plans. State unemployment taxes Reason: Medical insurance and Pension plans.

Pension plans Medical insurance

State unemployment taxes imposed on employers in order to provide unemployment benefits to qualified workers are known as: Multiple choice question. FICA SICA FUTA Reason: FUTA relates to Federal unemployment benefits. SUTA relates to state unemployment benefits. SUTA

SUTA

Zion Co. sells $100 of merchandise and collects $10 sales tax. The sales tax is recorded to which account? Multiple choice question. Sales tax payable Prepaid sales tax Sales tax revenue Sales tax expense

Sales tax payable

Amounts received in advance from customers for future products or services are typically recorded in a liability account called _______. Multiple choice question. Prepaid Expense Unearned Revenues Revenues Earned Accounts Payable

Unearned Revenues

Which of the following liabilities could be a multi-period known liability? (Check all that apply.) Multiple select question. Accounts Payable Reason: Accounts payable are due within 30 days and so are considered current liabilities and not multi-period liabilities which occur over multiple periods. Unearned Subscription Revenues Notes Payable Wages Payable Reason: Wages payable are considered current liabilities and not multi-period liabilities which occur over multiple periods.

Unearned Subscription Revenues Notes Payable

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. Multiple choice question. Employee Taxes Payable Employee Wages Payable Vacation Benefits Payable

Vacation Benefits Payable

The form that an employee uses to indicate the number of withholding allowances filed with the employer is called Form _______. Multiple choice question. W-2 W-1 W-3 W-4

W-4

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

benefits

A ___________ is when an employer provides employees with a percentage of the net income earned during the year. Multiple choice question. benefit plan bonus plan warranty plan vacation benefit plan

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: Multiple choice question. benefit plan bonus plan vacation plan warranty plan

bonus plan

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 _______. Multiple choice question. credit; $75 Reason: Interest Expense is debited for $75. debit; $75 credit; $600 Reason: Interest Expense is debited for $75 computed as $5,000x.12x(45/360). debit; $600 Reason: $5,000x.12x(45/360)=$75.

debit; $75

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 _______. Multiple choice question. credit; $600 Reason: Interest expense is debited for $75 computed as $5,000x.12x(45/360). The credit is to Cash for $5,075. debit; $600 Reason: $5,000x.12x(45/360)=$75. debit; $75 credit; $75 Reason: Interest expense is debited for $75 computed as $5,000x.12x(45/360). The credit is to Cash for $5,075.

debit; $75

Which of the following represent reasonably possible contingent liabilities? Select all that apply. Multiple select question. debt guarantees Reason: Potential legal claims and debt guarantees are types of liabilities that are considered reasonably possible. accounts payable Reason: Potential legal claims and debt guarantees are types of liabilities that are considered reasonably possible. potential legal claims Reason: Potential legal claims and debt guarantees are types of liabilities that are considered reasonably possible. warranties Reason: Potential legal claims and debt guarantees are types of liabilities that are considered reasonably possible.

debt guarantees potential legal claims

Bryne Co. sells merchandise and collects a 5% state sales tax. The tax is recorded on Bryne's general ledger as a(n) ______ account. Multiple choice question. revenue asset liability expense

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. Multiple choice question. revenue liability dividend expense

liability

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. Multiple choice question. current-period Reason: This is a multi-period liability because the unearned subscription revenue will extend over multiple periods. multi-period Reason: This is a multi-period liability because the unearned subscription revenue will extend over multiple periods. long-term Reason: This is a multi-period liability because the unearned subscription revenue will extend over multiple periods.

multi-period

Amounts withheld from an employee's gross pay are called: Multiple choice question. net pay payroll deductions bonus deductions wages payable

payroll deductions

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 __________. Multiple choice question. long-term note receivable long-term note payable short-term note payable short-term note receivable long-term account payable short-term account payable

short-term note payable

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. Multiple choice question. long-term note payable prepaid expense short-term note payable account payable

short-term note payable

The ratio of income before interest expense (and any income taxes) divided by interest expense—which reflects the risk of covering interest commitments when income varies—is called the ____________ ratio. Multiple choice question. interest payment times interest earned interest turnover

times interest earned

Examples of employee voluntary deductions may include all of the following except: Multiple choice question. unemployment taxes. pension contributions. medical premiums. charitable giving.

unemployment taxes.

________ are amounts owed to suppliers for products or services purchased on credit. Multiple choice question. Unearned fees Accounts payable Supplies expense Wages payable Prepaid supplies

Accounts 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? (Check all that apply.) Multiple select question. Credit to Notes Payable Credit to Accounts Payable Reason: Accounts payable should be debited to reduce it. Credit to Cash Reason: The credit is to Notes Payable. Debit to Cash Reason: The debit is to Accounts Payable. Debit to Accounts Payable Debit to Notes Payable Reason: Notes payable will be credited to increase it.

Credit to Notes Payable Debit to Accounts Payable

Which of the following situations is not a contingent liability? Multiple choice question. Future natural disaster Debt guarantee of owner Possible legal claim against a company Probable legal claim against a company

Future natural disaster

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. Multiple choice question. $20,400 $400 $0

$400

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? (Check all that apply.) Multiple select question. Credit to Cash Reason: Cash is not involved in this journal entry. Debit Warranty Expense and credit Estimated Warranty Liability. Debit to Cash Reason: When recording the warranty expense, you will debit Warranty Expense. Debit to Warranty Expense Credit to Warranty Expense Reason: Debit Warranty Expense and credit Estimated Warranty Liability. Debit to Estimated Warranty Liability Reason: When recording the warranty expense, you will debit Warranty Expense. Credit to Estimated Warranty Liability

Debit to Warranty Expense Credit to Estimated Warranty Liability

Employers are required to prepare and submit payroll reports to explain how they compute which of the following taxes? (Check all that apply.) Multiple select question. Federal taxes Local taxes Sales taxes State taxes

Federal taxes Local taxes State taxes

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 withheld. Multiple choice question. Form W-1 Form W-3 Form W-2 Form W-4

Form W-2

Which of the following items is not a payroll deduction? Multiple choice question. Federal income tax Employee income tax Net pay FICA taxes

Net pay

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. Multiple choice question. unemployment taxes FICA taxes income taxes voluntary deductions

voluntary deductions

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. Multiple choice question. 7.5 Reason: (30,000/3000)=10 0.10 Reason: (30,000/3000)=10 0.13 Reason: (30,000/3000)=10 10

10

Most employers are required to withhold ________ from an employee's paycheck. The amount withheld is computed using tables published by the IRS. The amount depends on the employee's annual earnings rate and the number of withholding allowances the employee claims. Multiple choice question. federal unemployment taxes state unemployment taxes federal income taxes

federal income taxes

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: Multiple choice question. warranties. unearned fees. payroll obligations. notes payable. accounts payable.

warranties.

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? Multiple choice question. The liability is probable, but the amount cannot be reasonably estimated. The liability is probable and estimated to be $10,000. The liability is remote and estimated to be $30,000. The liability is possible, but cannot be reasonably estimated. The liability is possible and estimated to be $25,000.

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

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? Multiple choice question. Accounts Payable Reason: This is an accounts payable which is being replaced with a note payable, so Notes Payable is credited to increase it. Notes Payable Accounts Receivable Reason: This is an accounts payable which is being replaced with a note payable, so Notes Payable is credited to increase it. Notes Receivable Reason: This is an accounts payable which is being replaced with a note payable, so Notes Payable is credited to increase it. Cash Reason: This is an accounts payable which is being replaced with a note payable, so Notes Payable is credited to increase it.

Notes Payable

The federal government requires that employers are taxed on employee wages to provide unemployment benefits to qualified workers. These taxes are known as: Multiple choice question. FUTA SICA Reason: This is a made up account name. FICA Reason: FUTA. SUTA Reason: SUTA is State Unemployment Taxes Payable.

FUTA

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 _______. Multiple choice question. Notes Payable; $10,800 Reason: Notes Payable will be debited for $10,000. Cash will be credited for $10,800. Cash; $10,133 Notes Payable; $10,133 Reason: Notes Payable is debited for the original amount of $10,000. The interest is recorded separately in the Interest Revenue account. Cash; $10,800 Notes Payable; $10,000 Cash; $10,000

Notes Payable; $10,000

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 ______. Multiple choice question. Cash; $1,060 Reason: Interest is computed for 120 days. $1,000 x .06 x (120/360) = $20. Cash will be credited for $1,000 + 20. Notes Payable; $1,060 Reason: 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. Notes Payable; $1,020 Reason: 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. Cash; $1,020 Reason: Interest is computed for 120 days. $1,000 x .06 x (120/360) = $20. Cash will be credited for $1,000 + 20. Cash; $1,000 Reason: Interest is computed for 120 days. $1,000 x .06 x (120/360) = $20. Cash will be credited for $1,000 + 20. Notes Payable $1,000 Reason: 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,

Cash; $1,020

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.

Blank 1: interest

On March 1, Young Co. borrowed $1,000 cash from Superior Bank 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 ______. Multiple choice question. Notes Payable; $1,060 Reason: 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. Cash; $1,000 Reason: Interest is computed for 120 days. $1,000 x .06 x (120/360) = $20. Cash will be credited for $1,000 + 20. Notes Payable $1,000 Reason: 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. Cash; $1,020 Reason: Interest is computed for 120 days. $1,000 x .06 x (120/360) = $20. Cash will be credited for $1,000 + 20. Notes Payable; $1,020 Reason: 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. Cash; $1,060 Reason: Interest is computed for 120 days. $1,000 x .06 x (120/360) = $20. Cash will be credited for $1,000 + 20.

Cash; $1,020