Econ 11

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 ______.

Cash; $1,020

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

FUTA

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.

Form W-2

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

benefits

Employers must pay employee taxes in addition to those paid by the employees. Which of the following is paid only by the employer? a. FICA b. Federal taxes c. State taxes d. Insurance premiums e. SUTA

e. SUTA

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

employer

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

estimated

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

estimated

A ________ register is a report that shows the pay period dates, hours worked, gross pay, deductions, and net pay of each employee for each pay period.

payroll

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

principal

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 $_____.

100,000

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 $_____.

15,000

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

Accounts payable

To compute the amount of taxes withheld from each employee's wages, an employer needs to determine both the employee's wages earned and the employee's number of withholding allowances. The employer will determine the number of withholding allowances using the ___________.

Form W-4

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.

Income Taxes Payable

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

Interest

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

True or false: Most large companies use a separate bank account for payroll purposes.

True

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

Unearned Revenues

Paid absences that are accrued throughout the year are recorded in the _____________ account.

Vacation Benefit Expense

The form that an employee uses to indicate the number of withholding allowances filed with the employer is called Form _______.

W-4

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? (Choose all that apply.) a. Debit to Cash b. Debit to Accounts Payable c. Credit to Cash d. Debit to Notes Payable e. Credit to Accounts Payable f. Credit to Notes Payable

b. Debit to Accounts Payable f. Credit to Notes Payable

Which of the following items are considered employee benefits? (Choose all that apply.) a. State unemployment taxes b. Pension plans c. Employee withholdings d. Medical insurance

b. Pension plans d. Medical insurance

Which of the following situations would require a journal entry to record the contingent liability in the financial statements? a. The liability is possible and estimated to be $25,000 b. The liability is remote and estimated to be $30,000. c. The liability is probable and estimated to be $10,000. d. The liability is possible, but cannot be reasonably estimated. e. The liability is probable, but the amount cannot be reasonably estimated.

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

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

register

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 __________.

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.

short-term note payable

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?

Accounts Payable

Employers use a special account for payroll for which of the following reasons? (Choose all that apply.) a. Internal control b. Ease of cashing checks c. Required by federal law d. Ease of reconciling

a. Internal control d. Ease of reconciling

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

d. Future natural disaster

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 _______.

debit; $75

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.

interest

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

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.

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.

liability

True or False: 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

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

FUTA

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 ______.

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

Employers are required to give each employee an annual report of his or her wages subject to FICA and federal income taxes, along with the amounts of these taxes withheld. This report is called a Wage and Tax Statement, or Form:

W-2

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? (Choose all that apply.) a. Credit to Income Taxes Payable b. Credit to Income Tax Expense c. Credit to Cash d. Debit to Cash e. Debit to Income Taxes Payable f. Debit to Income Tax Expense

a. Credit to Income Taxes Payable f. Debit to Income Tax Expense

Which of the following represent reasonably possible contingent liabilities? Select all that apply. a. debt guarantees b. potential legal claims c. warranties d. accounts payable

a. debt guarantees b. potential legal claims

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: a. warranties. b. notes payable. c. unearned fees. d. accounts payable. e. payroll obligations.

a. warranties.

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

liability

Which of the following contingent liabilities would require a company to record a note to the financial statements? (Choose all that apply.) a. The liability is probable and estimated to be $40,000. b. The liability is possible and cannot be reasonably estimated. c. The liability is remote and estimated to be $15,000. d. The liability is possible and is estimated to be $35,000. e. The liability is probable and cannot be reasonably estimated. f. The liability is remote and cannot be estimated.

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

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.

liability

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.

Vacation Benefits Payable

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

Sales tax payable