ACC Chapter 9

warranties.

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

Estimated

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

short-term note payable

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______.

liability

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.

number of employee withholding allowances employee's income

Employee income tax depends on:

FUTA

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

Credit to Sales Tax Payable

Fortiz Co. receives $85 for the sale of merchandise with a sales price of $80 and sales tax of $5. The entry to record the $5 sales tax would require which of the following?

10 (30,000/3000)=10

Kenesha Co. reported income before interest expense and income taxes of $30,000; interest expense of $3,000; and income taxes of $4,000. Calculate the times interest earned ratio.

Credit to Cash Debit to Sales Tax Payable

Lyon Co. collected $1,200 in sales tax from customers during the month of March. In April, Lyon sent the $1,200 sales tax to the state government. The entry to record payment to the state would include which of the following?

Credit to Subscriptions Earned Debit to Unearned Subscriptions

Mary's Magazine Sales sells popular magazine subscriptions. During January, Mary collected $1,200 from various customers to provide magazines over the next 12 months. At the end of February, Mary would make an adjusting entry to record one month of magazines subscriptions earned. This transaction would include which of the following entries?

Debit to Accounts Payable Credit to Notes Payable

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?

You are recording the amount accrued from 12/1 - 12/31: $100,000x.06x(30/360)=$500.

On December 1, Hansen Co. borrows $100,000 cash from National Bank by signing a 90-day, 6% interest-bearing note. On December 31, Hansen will record an adjusting entry by debiting interest expense in the amount of Blank______.

Notes Payable; $10,000 Notes Payable is debited for the original amount of $10,000. The interest is recorded separately in the Interest Revenue account.

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

The $1,500 is the total interest expense

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 interestField 1Field 1 interest , Correct Unavailable expense.

Parts Inventory

Perez Co. sells lawn mowers and warranties them for one year. Perez made an adjusting entry at the end of last year to record the warranty expense. In February of the current year, a customer needed a $50 repair to a lawn mover. The entry to record the repair includes a credit to Blank______.

debt guarantees potential legal claims

Which of the following represent reasonably possible contingent liabilities?

Sales tax payable

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

long-term liability

Ace Company borrowed $10,000 from Fair Rates Bank by signing a two-year note payable. Ace's operating cycle is 14 months. This note would be considered a Blank______ on the balance sheet.

Interest Payable for $50 Interest Expense for $100 Notes Payable for $10,000

On December 1, Campbell Co. borrowed $10,000 cash from Second Bank by signing a 90-day, 6% interest-bearing note. On December 31, Campbell accrued interest expense of $50. Campbell does not use reversing entries. On March 1, the due date of the note, Campbell will record the payment with debit entries to which of the following accounts?

Cash; $1,020 . $1,000 x .06 x (120/360) = $20. Cash will be credited for $1,000 + 20.

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______.

Debit to Warranty Expense Credit to Estimated Warranty Liability

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?

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.