Chapter 9 ACC

During the first week of January, an employee works 47 hours. For this company, workers earn 150% of their regular rate for hours in excess of 40 per week. Her pay rate is $22 per hour, and her wages are subject to no deductions other than FICA Social Security, FICA Medicare, and federal income taxes. The tax rate for Social Security is 6.2% of the first $128,400 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The employee has $86 in federal income taxes withheld. What is the amount of this employee's gross pay for the first week of January?

$1,111 Regular 40 $22 $880 Overtime 7 $33 231 Gross pay $1,111

The chief executive officer earns $10,060 per month. As of May 31, her gross pay was $50,300. The tax rate for Social Security is 6.2% of the first $128,400 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. What is the amount of FICA-Social Security withheld from this employee for the month of June?

$10,060 subject to FICA-Social Security × 0.062 = $623.72

The chief executive officer earns $20,800 per month. As of May 31, her gross pay was $104,000. The tax rate for Social Security is 6.2% of the first $128,400 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. What is the amount of FICA - Medicare withheld from this employee for the month of June?

$20,800 subject to FICA-Medicare × 0.0145 = $301.60

Portia Grant is an employee who is paid monthly. For the month of January of the current year, she earned a total of $8,688. The FICA tax for social security is 6.2% of the first $128,400 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The FUTA tax rate of 0.6% and the SUTA tax rate of 5.4% are applied to the first $7,000 of an employee's pay. The amount of federal income tax withheld from her earnings was $1,441.57. What is the total amount of taxes withheld from the Portia's earnings? (Round your intermediate calculations to two decimal places.)

************$2,106.21**************** Total Taxes = Federal Income Tax + FICA-SS Tax + FICA-Medicare Tax Total Taxes = $1,441.57 + $538.66* + $125.98** = $2,106.21 *FICA-SS Tax $8,688.00 × 0.062 = $538.66**FICA-Medicare Tax $8,688.00 × 0.0145 = $125.98

A company estimates that warranty expense will be 5% of sales. The company's sales for the current period are $206,000. The current period's entry to record the warranty expense is:

*******Debit Warranty Expense $10,300 credit Estimated Warranty Liability $10,300.****** Warranty Expense = Sales × Estimated Warranty Percentage Warranty Expense = $206,000 × 0.05 = $10,300

An employee earned $62,000 during the year working for an employer. The FICA tax rate for Social Security is 6.2% of the first $128,400 of employee earnings per calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. What is the amount of total unemployment taxes the employee must pay?

****0**** The question asks how much unemployment tax the employee must pay. The employer is the one responsible for unemployment taxes; not the employee.

On November 1, Alan Company signed a 120-day, 10% note payable, with a face value of $21,000. Alan made the appropriate year-end accrual. What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made? (Use 360 days a year.)

***Debit Notes Payable $21,000; debit Interest Payable $350; debit Interest Expense $350; credit Cash $21,700.**** Interest Expense = Principal × Interest Rate × Time Interest Expense = $21,000 × 0.10 × 60/360; Interest Expense = $350 (debit to Interest Expense) Interest Payable = Principal × Interest Rate × Time Interest Payable = $21,000 × 0.10 × 60/360; Interest Payable = $350 (debit to Interest Payable) Maturity Value = Principal + Interest ExpenseMaturity Value = $21,000 + $700 = $21,700 (credit to Cash)

Belkin Co. provides medical care and insurance benefits to its retirees. In the current year, Belkin agrees to contribute 5% of the employees' $330,000 gross salaries to a retirement program. What is the amount of employee benefits expense for the current period?

5% × $330,000 = $16,500

On April 12, Hong Company agrees to accept a 60-day, 10%, $5,300 note from Indigo Company to extend the due date on an overdue accounts payable. What is the journal entry needed to record the transaction by Indigo Company?

Debit Accounts Payable $5,300; credit Notes Payable $5,300.

Cantrell Company is required by law to collect and remit sales taxes to the state. If Cantrell has $5,500 of cash sales that are subject to an 8% sales tax, what is the journal entry to record the cash sales?

Debit Cash $5,940; credit Sales $5,500; credit Sales Taxes Payable $440. Sales Taxes Payable = Sales × Sales Tax Rate Sales Taxes Payable = $5,500 × 0.08 = $440 (Credit to Sales Taxes Payable) Cash Received = Sales + Sales Taxes PayableCash Received = $5,500 + $440 = $5,940 (Debit to Cash)

Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $964,000 to be paid during January of the following year. The journal entry on December 31 to record the bonuses is:

Debit Employee Bonus Expense $964,000; credit Bonus Payable $964,000.

During August, Boxer Company sells $364,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 3% of the selling price. The warranty liability account has a credit balance of $13,600 before adjustment. Customers returned merchandise for warranty repairs during the month that used $10,200 in parts for repairs. The entry to record the customer warranty repairs is:

Debit Estimated Warranty Liability $10,200; credit Parts Inventory $10,200.

On April 12, Hong Company agrees to accept a 60-day, 10%, $10,500 note from Indigo Company to extend the due date on an overdue account. What is the journal entry that Indigo Company would make, when it records payment of the note on the maturity date? (Use 360 days a year.)

Debit Notes Payable $10,500; debit Interest Expense $175; credit Cash $10,675. Interest Expense = Principal × Interest Rate × Time Interest Expense = $10,500 × 0.10 × 60/360 = $175 (Debit to Interest Expense) Cash Proceeds = Notes Payable + Interest Expense Cash Proceeds = $10,500 + $175 = $10,675 (Credit to Cash)

Athens Company's salaried employees earn two weeks of vacation per year. The company estimated and must expense $10,000 of accrued vacation benefits for the year. Which of the following is the necessary year-end adjusting entry to record accrued vacation benefits?

Debit Vacation Benefits Expense $10,000; credit Vacation Benefits Payable $10,000.

During August, Boxer Company sells $360,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 4% of the selling price. The warranty liability account has a credit balance of $12,400 before adjustment. Customers returned merchandise for warranty repairs during the month that used $9,000 in parts for repairs. The entry to record the estimated warranty expense for the month is:

Debit Warranty Expense $14,400; credit Estimated Warranty Liability $14,400. Warranty Expense = $360,000 × 0.04 = $14,400

Athena Company provides employee health insurance that costs $14,700 per month. In addition, the company contributes an amount equal to 4% of the employees' $147,000 gross salary to a retirement program. The entry to record the accrued benefits for the month would include a:

Debit to Employee Benefits Expense $20,580. Accrued Expenses = ($147,000 × 0.04) + $14,700 = $20,580

An employee earned $42,900 working for an employer in the current year. The current rate for FICA Social Security is 6.2% payable on earnings up to $128,400 maximum per year and the rate for FICA Medicare 1.45%. The employer's total FICA payroll tax for this employee is:

Employer's Total FICA Tax = $42,900 × (0.062 + 0.0145) = $3,281.85

An employee earned $45,200 during the year working for an employer when the maximum limit for Social Security was $128,400. The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The employee's annual FICA taxes amount is:

FICA Taxes = Wages × (FICA tax rate + Medicare tax rate)FICA Taxes = $45,200 × (0.062 + 0.0145) = $3,457.80

On December 1, Victoria Company signed a 90-day, 6% note payable, with a face value of $12,000. What amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)

Interest Expense = Principal × Interest Rate × Time Interest Expense = $12,000 × 0.06 × 30/360 = $60

On November 1, Alan Company signed a 120-day, 10% note payable, with a face value of $20,700. What is the adjusting entry for the accrued interest at December 31 on the note? (Use 360 days a year.)

Interest Expense = Principal × Interest Rate × Time Interest Expense = $20,700 × 0.10 × 60/360 = $345 *****Debit Interest Expense, $345; credit Interest Payable, $345.******

On November 1, Alan Company signed a 120-day, 9% note payable, with a face value of $25,200. What is the maturity value (principal plus interest) of the note on March 1? (Use 360 days a year.)

Interest Expense = Principal × Interest Rate × Time Interest Expense = $25,200 × 0.09 × 120/360 = $756 Maturity Value = Principal + Interest Expense Maturity Value = $25,200 + $756 = $25,956

Portia Grant is an employee who is paid monthly. For the month of January of the current year, she earned a total of 8,838. The FICA tax for social security is 6.2% of the first $128,400 of employee earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The FUTA tax rate of 0.6% and the SUTA tax rate of 5.4% are applied to the first $7,000 of an employee's pay. The amount of federal income tax withheld from her earnings was $1,466.47. Her net pay for the month is: (Round your intermediate calculations to two decimal places.)

Net Pay = Gross Pay − Federal Income Tax − FICA-SS Tax − FICA-Medicare Tax Net Pay = $8,838 − $1,466.47 − $547.96* − $128.15** = $6,695.42--- answer *FICA-SS Tax $8,838 × 0.062 = $547.96**FICA-Medicare Tax $8,838 × 0.0145 = $128.15

An employee earns $6,300 per month working for an employer. The FICA tax rate for Social Security is 6.2% of the first $128,400 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The employee has $214 in federal income taxes withheld. The employee has voluntary deductions for health insurance of $182 and contributes $91 to a retirement plan each month. What is the amount of net pay for the employee for the month of January? (Round your intermediate calculations to two decimal places.)

Net Pay = Gross Pay − Federal Income Tax − FICA-SS Tax − FICA-Medicare Tax − Health Insurance − Retirement Plan Net Pay = $6,300 − $214 − $390.60* − $91.35** − $182 − $91 = *******8$5,331.05******* *FICA-SS Tax $6,300 × 0.062 = $390.60**FICA-Medicare Tax $6,300× 0.0145 = $91.35

An employee earns $5,800 per month working for an employer. The FICA tax rate for Social Security is 6.2% of the first $128,400 of earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The employee has $194 in federal income taxes withheld. The employee has voluntary deductions for health insurance of $162 and contributes $81 to a retirement plan each month. What is the amount the employer should record as payroll taxes expense for the employee for the month of January?

Payroll Tax Expense = FICA-SS Tax1 + FICA-Medicare Tax2 + FUTA Tax3 + SUTA Tax4 Payroll Tax Expense = $360 + $84.10 + $35 + $313 = ****$791.70**** 1FICA-SS Tax $5,800 ×0.062 = $359.60 2FICA-Medicare Tax $5,800 × 0.0145 = $84.10 3FUTA Tax $5,800 × 0.006 = $34.80 4SUTA Tax $5,800 × 0.054 = $313.20

Gary Marks is paid on a monthly basis. For the month of January of the current year, he earned a total of $9,238. FICA tax for Social Security is 6.2% on the first $128,400 of earnings each calendar year and the FICA tax for Medicare is 1.45% of all earnings. The FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The amount of Federal Income Tax withheld from his earnings was $1,532.87. What is the amount of the employer's payroll taxes expenses for this employee? (Round your intermediate calculations to two decimal places.)

Payroll Taxes = FICA-SS Tax + FICA-Medicare Tax + FUTA Tax + SUTA Tax Payroll Taxes = $572.761 + $133.952 + $42.003 + $378.004 = $1,126.71 1FICA—Social security $9,238 × 0.062 = $572.76 2FICA—Medicare $9,238 × 0.0145 = $133.95 3FUTA $7,000 × 0.006 = $42.00 4SUTA $7,000 × 0.054 = $378.00

A company had interest expense of $9,000, income before interest expense and income taxes of $20,000, and net income of $10,400. The company's times interest earned ratio equals:

Times Interest Earned Ratio = Income before Interest Expense and Income Taxes/Interest Expense Times Interest Earned Ratio = $20,000/$9,000 = 2.22

A company's interest expense is $18,000. Its income before interest expense and income taxes is $117,000. Its net income is $46,800. The company's times interest earned ratio equals:

Times Interest Earned Ratio = Income before Interest Expense and Income Taxes/Interest Expense Times Interest Earned Ratio = $117,000/$18,000 = 6.50

A company's income before interest expense and income taxes is $350,000 and its interest expense is $100,000. Its times interest earned ratio is:

Times Interest Earned Ratio = Income before Interest Expense and Income Taxes/Interest Expense Times Interest Earned Ratio = $350,000/$100,000 = 3.50

The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both taxes are applied to the first $7,000 of an employee's pay. Assume that an employee earned total wages of $10,900. What is the amount of total unemployment taxes the employer must pay on this employee's wages?

Unemployment Taxes = $7,000 × (0.006 + 0.054); Unemployment Taxes = $420.00

A company has a selling price of $1,300 each for its printers. Each printer has a 2 year warranty that covers replacement of defective parts. It is estimated that 2% of all printers sold will be returned under the warranty at an average cost of $140 each. During November, the company sold 20,000 printers, and 300 printers were serviced under the warranty. What is the company's warranty expense for the month of November?

Warranty Expense = (20,000 units × $140) × 0.02 = $56,000

During the first week of January, an employee works 46 hours. For this company, workers earn 150% of their regular rate for hours in excess of 40 per week. Her pay rate is $32 per hour, and her wages are subject to no deductions other than FICA Social Security, FICA Medicare, and federal income taxes. The tax rate for Social Security is 6.2% of the first $128,400 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The employee has $96 in federal income taxes withheld. What is the amount of this employee's net pay for the first week of January? (Round your intermediate calculations to two decimal places.)

in SC