Chapter 11

increased; the Interest Payable account is increased.

As interest is recorded on an interest-bearing note, the Interest Expense account is

current liability

Any balance in an unearned revenue account is reported as a

one year or the operating cycle, whichever is longer.

A current liability is a debt the company reasonably expects to pay from existing current assets within

a written promissory note

A note payable is in the form of

current liability

Advances from customers are classified as a

can be properly classified during balance sheet preparation, with no adjusting entry required.

Current maturities of long-term debt

should be disclosed in the notes accompanying the financial statements.

If a contingent liability is reasonably estimable and it is reasonably possible that the contingency will occur, the contingent liability

$2,227 ($3,000)(1 - .0765 - .02) - $476 - $8 = $2,227

Kenny Corsig, an employee of Fenwick Company, has gross earnings for the month of October of $3,000. FICA taxes are 7.65% of gross earnings, federal income taxes amount to $476 for the month, state income taxes are 2% of gross earnings, and authorizes voluntary deductions of $8 per month to the United Way. What is the net pay for Kenny?

$3,600. 20 × $120 × 1.5 = $3,600

Lake Norman Company has twenty employees who each earn $120 per day. If they accumulate vacation time at the rate of 1.5 vacation days for each month worked, the amount of vacation benefits that should be accrued at the end of the month is

Long-term debt, $100,000; Long-term debt due within one year, $50,000. $200,000 - $50,000 - $50,000 = $100,000

Lulu Luxuries Company issued a four-year interest-bearing note payable for $200,000 on January 1, 2016. Each January the company is required to pay $50,000 on the note. How will this note be reported on the December 31, 2017 balance sheet?

($5,000) and .90:1. $45,000 - $50,000 = ($5,000); $45,000 / $50,000 = .90 : 1

Monkee's Company has current assets of $45,000, current liabilities of $50,000, long-term assets of $90,000 and long-term liabilities of $40,000. Monkee's Company's working capital and its current ratio are

debit to Interest Payable of $60,000. $800,000 × .10 × 9/12 = $60,000

On October 1, 2016, Pennington Company issued an $800,000, 10%, nine-month interest-bearing note. Assuming interest was accrued in June 30, 2017, the entry to record the payment of the note on July 1, 2017, will include a

vacation benefits

Post-retirement benefits include all of the following except

Cash 2,400,000 Unearned Subscription Revenue 2,400,000

Southern Foodie Company typically sells subscriptions on an annual basis, and publishes six times a year. The magazine sells 80,000 subscriptions in January at $30 each. What entry is made in January to record the sale of the subscriptions?

current assets divided by current liabilities.

The current ratio is

face value

The entry to record the issuance of an interest-bearing note credits Notes Payable for the note's

debit to Payroll Tax Expense for $10,772 $6,132 + $4,000 + $640 = $10,772

The following totals for the month of June were taken from the payroll register of Parks Company. Salaries and wages $80,000 FICA taxes withheld 6,132 Income taxes withheld 17,600 Medical insurance deductions 3,200 Federal unemployment taxes 640 State unemployment taxes 4,000 The entry to record accrual of Parks's Company's payroll taxes would include a

$4,500. $225,000 × .08 × 3/12 = $4,500

The interest charged on a $225,000 note payable, at the rate of 8%, on a 3-month note would be

liabilities in order of magnitude

Which of the following statements about liabilities under IFRS in incorrect? Companies sometimes show

current assets minus current liabilities

Working capital is