ACC Chapter 9

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 $

$1000

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

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

Accounts 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? (Check all that apply.)

Credit to Notes Payable Debit to Accounts Payable

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) _______ account.

Estimated Warranty Liability

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 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

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

Sales tax payable

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

A ___________ is when an employer provides employees with a percentage of the net income earned during the year.

bonus plan

When a company guarantees the payment of debt owed by a supplier, customer or another company, the guarantor usually discloses the guarantee as a ____ liability.

contingent

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

current liability

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 $5,000x.12x(45/360)=$75.

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

estimated

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

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

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

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

multi-period

A potential legal claim is recorded

only if payment for damages is probable and the amount can be reasonably estimated.

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 not payable

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

unearned revenue

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

unemployment

Paid absences offered to employees are called _ benefits.

vacation

Paid absences offered to employees are called

vacation benefits

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

warranties

A _______is a seller's obligation to replace or fix a product (or service) that fails to perform as expected within a specified period.

warranty