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Exam 11: Current Liabilities and Payroll

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Question 51

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Employer FICA tax is paid by the employer and is added to the employee's earnings.

A) True
B) False

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Question 52

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Ron is an employee of Panache, Inc. Panache pays a portion of his health insurance premium and also contributes to a retirement plan in his name. The company's share of the health insurance premium is $600, and the company's contribution to the retirement plan is $860. The journal entry to record the employee benefits to be paid by the company should include a debit to Employee Health Insurance Payable for $1,460.

A) True
B) False

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Question 53

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Josh Baker works for Jones Restaurant Supply all year and earns a monthly salary of $8,000. There is no overtime pay and Jones withholds income taxes at 12% of gross pay. Jones deducts $200 monthly for the co-payment of the health insurance premium. Employees are paid on the fifth day of each month. As of October, 31, Josh had $80,000 of cumulative earnings. Journalize the accrual of salaries expense on October 31. Omit explanations.

Sean's gross pay for this month is $8750. His gross year-to-date pay, prior to this month, totaled $112,000. Sean's rate for federal income tax is 25%. His voluntary deductions total $950. What is Sean's net pay? (Assume an OASDI rate of 6.2%, applicable on the first $118,500 earnings, and a Medicare rate of 1.45%, applicable on all earnings. Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

Dan Jones and Pat Smith are two employees of Lone Star, Inc. In January 2019, Dan's gross pay was $11,500, and Pat's gross pay was $15,400. All earnings are subject to FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%. Which of the following would be included in the entry to record the payroll tax expense to be paid out by Lone Star, Inc. for January?

Which of the following statements regarding vacation benefits is correct?

Norwood, Inc. signs a $11,000, 8.5%, six-month note dated November 1, 2018. The interest expense recorded for this note in 2018 will be ________. (Do not round any intermediate calculations, and round your final answer to the nearest dollar.)

Sales revenue for a sporting goods store amounted to $526,000 for the current period. All sales are on account and are subject to a sales tax of 10%. Which of the following would be included in the journal entry to record the sales transaction?

The times-interest-earned ratios of Orlando, Inc. are 20.56 and 7.35 for 2018 and 2019, respectively. Which of the following can be the possible reason for such a change from 2018 to 2019?

Which of the following deductions is paid by both the employer and employee?

Lawrence, an employee of Light, Inc., has gross salary for March of $4,000. The entire amount is under the OASDI limit of $118,500, and thus subject to FICA. His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA. Which of the following is a part of the journal entry to record the employer's payroll taxes?

If a contingency is remote, the company does not need to record a liability and does not need to disclose it in the notes to the financial statements.

The current portion of long-term notes payable is ________.

Net pay is the total amount of compensation that an employee takes home after the deductions are made.

Employer FICA is paid by the employer and recorded as a payroll tax expense.

Harrison, an employee of Safe Associates, Inc., has gross salary for March of $4,000. The entire amount is under the OASDI limit of $118,500 and thus subject to FICA. He is also subject to federal income tax at a rate of 18%. Harrison has a deduction of $320 for health insurance and $80 for United Way. Which of the following is included in the entry to record the disbursement of his net pay?

Under IFRS, "probable" is defined as more than a 50% chance.

Which of the following would be included in the journal entry to record the payment of sales tax payable?

Which of the following is included in the entry to record accrual of warranty expense?

A contingency was evaluated at year-end and considered to have a reasonable possibility of becoming an actual liability. If this was not reported on the balance sheet or in the notes to the financial statements, it could be considered a violation of generally accepted accounting principles.