ACCT 2301 Chapter 9 (McGraw Hill)

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 Blank______ for the month.

$400

Victor's Vacuum Sales Co. sells high quality vacuums and provides a one-year warranty on all new sales. Based on history, Victor anticipates that 3% of vacuums will be returned at a cost of $30 per vacuum. During the month, Victor sold 100 vacuums for a total of $35,000. At the end of the month, Victor will record Blank______ in Warranty Expense.

$90

Jorge Lopez worked 40 hours this week and earned $1,000 in total compensation. Federal and state taxes and other withholdings totaled $350. Jorge's gross pay totals $

1,000

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

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 $

15000

______ are amounts owed to suppliers for products or services purchased on credit.

Accounts payable

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 Blank______ in the amount of Blank______.

Cash; $1,020

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 Blank______ in the amount of Blank______.

Cash; $1,020

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.)

Credit to Estimated Warranty Liability Debit to Warranty Expense

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.)

Credit to Notes Payable Debit to Accounts Payable

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.)

Credit to Unearned Paving Fees Earned Debit to Cash

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?

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) Blank______ account.

Estimated Warranty Liability

Leo Calvin is required to have Blank______ taxes withheld from his pay in order to cover the cost of future retirement, disability, survivorship and medical benefits.

FICA

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

FUTA

Which of the following situations is not a contingent liability?

Future natural disaster

______ is(are) the total compensation an employee earns including wages, salaries, commissions, bonuses, and any compensation earned before deductions such as taxes.

Gross pay

Which of the following items are considered employee benefits? (Check all that apply.)

Medical insurance Pension plans

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

Which of the following liabilities could be a multi-period known liability? (Check all that apply.)

Notes Payable Unearned Subscription Revenues

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 Blank______ in the amount of Blank______.

Notes Payable; $1,000

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 __.

Notes Payable; $10,000

Which of the following situations would require a journal entry to record the contingent liability in the financial statements?

The liability is probable and estimated to be $10,000.

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?

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

Amounts received in advance from customers for future products or services are typically recorded in a liability account called Blank______.

Unearned Revenues

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. The year-end adjusting entry is recorded as a credit to the Blank______ account.

Vacation Benefits Payable

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

accounts payable

Employee Blank______ are perks that are provided in addition to salaries and wages, such as all or part of medical, dental, life and disability insurance.

benefits

A Blank______ is when an employer provides employees with a percentage of the company's net income earned during the year.

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:

bonus plan

Amounts withheld from employee's earnings for employee income tax is considered a Blank______ by the employer until the government is paid.

current liability

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) Blank______ to Interest Expense in the amount of Blank______.

debit; $75

Unemployment taxes are examples of (employee/employer) ____ required taxes.

employer

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

estimated

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

estimated

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

interest

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

known

A(n) (asset/liability/revenue) ___ 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

Unearned subscription revenues that extends over multiple periods is an example of a Blank______ known liability.

multi-period

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

net

Employee income tax depends on: (Check all that apply.)

number of employee withholding allowances employee's income

Amounts withheld from an employee's gross pay are called:

payroll deductions

The (principal/maturity) ____ of a note is the amount that the signer of a note agrees to pay back when it matures, not including interest.

principal

Examples of employee voluntary deductions may include all of the following except:

unemployment taxes.

Paid absences offered to employees are called (pension/vacation) ____ benefits.

vacation

Employers often withhold amounts from employees' earnings which arise from employee requests, contracts, unions, or other agreements. These withholdings are called employee Blank______ and include items such as medical premiums.

voluntary deductions

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.

False

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) Blank______ on her balance sheet.

short-term note payable

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 Estimated Warranty Liability Debit to Warranty Expense

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

FUTA

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 Blank______.

short-term note payable

A known liability is a measurable obligation arising from agreements, contracts, or laws. Known liabilities would include all of the following items, except:

warranties.

Which of the following items would be considered a current liability? (Check all that apply.)

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

Zion Co. sells $100 of merchandise and collects $10 sales tax. The sales tax is recorded to which account?

Sales tax payable

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

SUTA

Which of the following contingent liabilities would require a company to record a note to the financial statements? (Check all that apply.)

The liability is possible and is estimated to be $35,000. The liability is probable and cannot be reasonably estimated. The liability is possible and cannot be reasonably estimated.

Employers must pay employee taxes in addition to those paid by the employees. Which of the following is paid only by the employer?

Unemployment

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) Blank______ to Interest Expense in the amount of Blank______.

debit; $75

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

Bryne Co. sells merchandise and collects a 5% state sales tax. The tax is recorded on Bryne's general ledger as a(n) Blank______ account.

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) Blank______ account.

liability

In order for a contingent liability to be recorded as a journal entry in the financial statements, it must be (probable/reasonably possible/remote) ____ and reasonably estimable.

probable

A contingent liability can be ignored (not recorded in the financial statements or notes to the financial statements) if it is considered as (probable/reasonably possible/remote) ____ possibility.

remote