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Exam 9: Current Liabilities

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Question 31

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An employee earned $47,000 during the year working for an employer. The FICA tax for social security is 6.2% and the FICA tax for Medicare is 1.45%. The employee's share of FICA taxes is:

A) $681.50
B) $2,914.00
C) $3,595.50
D) $7,191.00
E) Zero, since the employee's pay exceeds the FICA limit

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Question 32

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A _____________________ shows the pay period dates, hours worked, gross pay, deductions and net pay of each employee for every pay period.

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Question 33

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Payroll is usually paid with a check or with the use of an electronic funds transfer.

When the times interest earned ratio declines, the likelihood of default on liabilities increases.

A liability is a probable future payment of assets or services that a company is currently obligated to make as a result of past transactions or events.

Federal depository banks are authorized to accept deposits of amounts payable to the federal government.

Times interest earned can be calculated by multiplying income by the interest rate on a company's debt.

Liabilities:

Current liabilities are obligations not due within one year or the company's operating cycle, whichever is longer.

A payroll register is a cumulative record of an employee's hours worked, gross earnings, deductions and net pay.

The employer should record payroll deductions as:

When the number of withholding allowances increases, the amount of income tax withheld increases.

A special bank account used solely for the purpose of paying employees, is created by depositing the amount of each employees' net pay into the account every pay period. This account is referred to as a(n) :

The payroll records of a company provided the following data for the currently weekly pay period ended March 7. Assume that the Social Security portion of the FICA taxes is 6.2% on the first $106,800 and the Medicare portion is 1.45% of all wages paid to each employee for this pay period. The federal and state unemployment tax rates are 0.8% and 5.4%, respectively, on the first $7,000 paid to each employee. Calculate the net pay for each employee.

On October 10, 2010, Printfast Company sells a commercial printer for $2,350 with a one year warranty that covers parts. Warranty expense is project to be 4% of sales. On February 28, 2011, the printer requires repairs. The cost of the parts for the repair is $80 and Printfast pays their technician $150 to perform the repair. What is the warranty liability at the end of 2010?

A short-term note payable is a written promise to pay a specified amount on a definite future date within one year or the operating cycle, whichever is longer.

FUTA requires employers to pay a federal unemployment tax on the first $7,000 in salary or wages paid to each employee.

Coke had income before interest expense and income taxes of $5,698 million and interest expense of $199 million. Calculate Coke's times interest earned ratio.

The annual Federal Unemployment Tax Return is:

The Wage and Tax Statement is: