Ch 9 LearnSmart Accounting

Tire Co. collected $2,000 in sales tax during the month of October. The entry that shows the remittance of this sales tax to the state government in November would include a credit to the ______ account.

Cash

John Grey owns Grey's Snow Plowing. In Oct, he collects 12,000 cash for 6 commercial accounts for which he will provide snowplowing for the next three months. John recorded the cash collection as an unearned revenue. To record the adjusting entry in Nov, when 4,000 has been earned, Grey will enter what entries?

Credit to Plowing Revenue Earned Debit to Unearned Plowing Revenue

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?

Credit to Sales Tax Payable

Vance Co. allows employees to take a two week vacation each year. A newly hired employee wlll earn $20,800 per year. To account for the two weeks off each year, Dante will accrue $16 In each of the 50 weeks. This accrual will be recorded to which of the following accounts?

Credit to vacation benefits payable Debit to vacation benefits expense

John Grey owns Grey's Snow Plowing. In October, Grey's collects $12,000 cash for 6 commercial accounts for which he will provide snowplowing for the entire season. To record this transaction, Grey will enter which of the following entries?

Debit to Cash Credit to Unearned Plowing Revenue

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?

Debit to Warranty Expense Credit to Estimated Warranty Liability

Patel Paving collected $1,000 cash in advance from a customer to provide pacing services next month. The entry to record this cash receipt would include the following entries?

Debit to cash credit to unearned paving fees

Zito Co. has accrued employee salary expense of $1,000 which Includes employee withholdings that total $300. On payday, Zilo will record the payment with which of the following entries?

Debit to salaries payable for 700 Credit to cash for 700

Camelot Co. expects that bonuses for the year will be 100,000. The 12/31 entry will require a debit to the ___ account in the amount of ___

Employee bonus expense, 100,000

FICA and unemployment taxes are examples of ___ taxes

Employer

The federal Social Security system provides retirement, disability, survivorship, and medical benefits to qualified workers. Laws require employers to withhold ___ taxes from employees pay to cover costs of the system

FICA

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

FUTA

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

Gross pay

___ is the charge for using money (or other assets) loaned from one entity to another.

Interest

On November 1, Lance Co. borrows $90,000 cash from First Bank by signing a 90-day, 5% interest-bearing note. On December 31, Lance will record an adjusting entry by crediting ___ in the amount of ___

Interest Payable, 750

On Dec 1, Campbell Co. borrowed 10,000 cash from Second Bank by signing a 90-day 6% interest-bearing note. On Dec 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 what accounts?

Interest expense for 100 Interest Payable for 50 Notes Payable for 10000

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

Sales tax payable

Arnold Co. allows each employee to take two weeks vacation during each year. A newly hired employee will earn annual pay of $31,200. To accrue for the two weeks off each year, Arnold will accrue approximately___to the Vacation Benefits account in each of the 50 weeks.

24

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 approx. 2% of sales. During the month, Boyd sales total 20,000. Boyd will record Warranty Expense in the amount of __ for the month.

400

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 ___

650

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

Accounts payable

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

estimated

Employee benefits that are paid by the employer are recorded in the Employee Benefit ___ account.

expense

Employer taxes, such as SUTA, are recorded with a debit to Employer Tax Expense and a credit to SUTA (expense/payable)___ until payments are submitted to the state.

payable

Which of the following represent reasonably possible contingent liabilities?

potential legal claims debt guarantees

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

principal

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

remote

A written promise to pay a specified amount on a definite future date within one year or the company's operating cycle, whichever is longer, is considered a

short term note payable

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

voluntary deductions

On January 8, Lee Co. borrows 100,000 cash from National Bank by signing 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

Which of the following items would be considered a current liability?

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

What contingent liabilites would require a company to record a note to the financial statements?

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

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

On January 1, KC Co. borrowed $10,000 cash from Lake St. Bank by signing a 90-day, 8% interestbearing note. How much interest will result from this note?

$200

During December 2009, Marci Lane opens a computer sales store selling new computers and offering a six-month warranty on all new sales. During December, Lane makes three sales totaling $4,000. Lane estimates warranty repairs will total 15% of sales. In January 2010, a customer submits a warranty claim requiring $300 of work. Lane will record a debit to Estimated Warranty Liability in the amount of ___ In January 2010 for the warranty work.

$300

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

Woods Co. has a note payable due in monthly installments over the next five years. This note will be reported under which of the following categories of the balance sheet

Long term liabilities current liabilities

Which of the following Items is not a payroll deduction?

Net pay

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

On January 1, Avers Co. borrowed $10,000 cash from Main St. Bank by signing a 60-day, 8% interest-bearing note. On March 1, Avers pays the amount due in full. The March 1 entry would be recorded by Avers with a debit to __ in the amount of ___

Notes Payable, $10,000

Harvey Co. has current period employee salary expenses of $800. Employee withholdings total $300. The entry to accrue current period payroll will include a credit to Salaries ___ in the amount of ___.

Payable, 500

Which of the following items are considered employee benefits?

Pension plans Medical insurance

In order for a contingent liability to be recorded as a journal entry in the financial statements, it must be ___ and reasonably estimable.

Probable

A company sells 12-month subscriptions to popular magazines. During the month of May, the company sells $10,000 in magazines, which will start in June. The journal entry to record the sales not yet earned will include a credit to which account?

Unearned Subscription Revenue

Which of the following liabilities could be a multi-period known liability?

Unearned subscription revenue Notes payable

Paid absences that are accrued throughout the year are recorded in the _____ account

Vacation benefit expense

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

Warranty

When recording a liability, a company may not know

When, whom and how much to pay

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

On June 1, Sawyer Co. borrowed $5,000 cash from Crystal Bank by signing a 45-day, 12% interested-bearing note. On July 16, 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

Rachel Ryder is an employee working at Brand-Mart. Rachel earns $35,000 per year and claims three withholding allowances. The amount withheld from her paycheck, using this information, is called federal ___ taxes.

income

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 _____ on the balance sheet

long-term liability