ACCT Ch.9 Smartbook notes

warranty

A (repair/warranty) _ is a seller's obligation to replace or fix a product (or service) that fails to perform as expected within a specified period.

warranty

A (repair/warranty)______ is a seller's obligation to replace or fix a product (or service) that fails to perform as expected within a specified period.

bonus plan

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

warranties

A known liability is 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.

Notes Payable Reason: This is an account payable which is being replaced with a note payable, so Notes Payable is credited to increase it.

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?

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 er balance sheet.

benefits

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.

number of employee withholding allowances employee's income

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

Unemployment

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

net, take-home, or take home

Gross pay minus all deductions - including federal and state taxes, FICA and any voluntary deductions equals ______ pay.

650 or $650

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

False Reason: Contingent liabilities cannot be recorded for future events.

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

Debit Cash Credit Unearned Paving Fees Earned

Pattel 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)

$1,500

Sheldon has a $15,000 liability for a machine that has an interest rate of 10%. The interest expense for one year is?

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.

Accounts Payable

Sport 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?

employer

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

contingent

When a company guarantees the payment of debt owed by a supplier, customer or another company, the guarantor usually discloses the guarantee as a (known/contingent)_ liability.

- 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.

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

Medical insurance Pension plans

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

potential legal claims debt guarentees

Which of the following represent reasonably possible contingent liabilities? (Check all that apply.)

Future natural disaster

Which of the following situations is not a contingent liability?

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

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?

Sales tax payable

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

Gross pay

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

Accounts Payable

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

Gross pay

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

known

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

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

A potential legal claim is recorded

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 _______

estimated

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

liability

A(n) is a probable future payment of assets or services that a company is presently obligated to make as a result of past transaction or events.

Unearned Revenues

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

Accounts Payable

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

current liability

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

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

Notes Payable

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; $10,000 Reason: Notes Payable will be debited for the original amount of $10,000. The interest is recorded separately in the Interest Revenue Account. Cash will be credited for $10,800.

On January 1, Avers Co. borrowed $10,000 by extending their past-due accounts payable with a 60-day, 8% interest-bearing note. On March 1, the due date, Avers pays the amount due in full. The entry would be recorded by Avers with a debit to (Accounts Payable/Notes/Cash)___in the amounts of ____.

interest

On January 8, Lee Co. borrow 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.

debit; $75

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______.

vacation

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

650 or $650

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

Credit to Notes Payable Debit to 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)

Debit to Accounts Payable Credit to Notes Payable

Niwa Co. replaced a $3,000 accounts 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?

Cash Reason: Interest is computed for 120 days. $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 ______ in the amount of _______.

Cash; $1,020 Reason: Interest is computed for 120 days. $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______

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

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

$200 Reason: $15,000 x .08 x (60/360) = $200

Winn Co. signs a 60 day note payable for a $15,000 copy machine with an interest rate of 8%. Winn will record total interest expense of

Vacation Benefits Payable

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.

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:

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.

probable

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.

interest

Is the difference between the amount borrowed and the amount repaid.

1000 or 1,000

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