acc ch10

Which of the following are not required payroll deductions from an employees' gross earnings?

Charitable contributions State unemployment tax (SUTA) Federal unemployment tax (FUTA)

Acme Enterprises began the new year owing its suppliers $3,000 for merchandise purchased last year. Acme then sold half of this merchandise for $5,000 on account. Two weeks later, Acme paid its suppliers $1,000 and bought another $4,000 of merchandise on account. Acme now has an Accounts Payable balance of ______.

Reason: Accounts Payable balance = $3,000 - 1,000 + 4,000 = $6,000.

Net pay is calculated by ______.

subtracting payroll deductions from gross pay

Liabilities are classified as current if they ______.

will be paid within the company's operating cycle or within 1 year, whichever is longer

Ace Electronics signed a 10-year, $100,000, 4% note payable on January 1. When the note is signed, Ace should record a liability of ______.

$100,000 Reason: A liability is first recorded at $100,000, representing the amount of cash a creditor would accept to immediately settle the liability, which excludes interest charges.

Gross earnings for the pay period are $100,000. Required payroll deductions are: Social Security $6,700; Medicare $1,450; Federal Income tax $18,000 and State income tax $3,850. What is the net pay to employees?

$70,000

on a classified balance sheet report the obligations that will be paid or met within the company's operating cycle or within 1 year, whichever is longer.

Current liabilities

ABC Company is in the process of issuing bonds. The bonds have a stated interest rate of 6%, which is 2% above the current market rate. What effect will the two interest rates have on the bond issue price?

The issue price will be above the bond's face value.

Payroll deductions ______.

are amounts subtracted from employees' gross earnings to determine their net pay decrease the amount of cash an employee receives

Accrued Liabilities are ______.

current liabilities resulting from adjusting entries that record amounts incurred but not yet paid

If a bond's stated rate is 4% and the market rate is 4%, this bond will sell at ______.

face value

Issuing a note payable for cash immediately results in a(n) ______.

increase in assets and an increase in liabilities

The entry to record the initial borrowing of cash by issuing a promissory note causes a(n) ______.

increase in liabilities increase in assets

Accruing a liability always involves ______ expenses and ______ liabilities.

increasing; increasing

Accounts (or trade) Payable is debited when ______ and credited when ______.

paid; purchases are made on credit

The entry to record the payment of previous purchases made on account includes a ______. (Select all that apply.)

debit to Accounts Payable credit to Cash