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Exam 9: Reporting and Analyzing Current Liabilities

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Question 61

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

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Question 62

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The amount of federal income tax withheld from employee pay depends on the employee's annual earnings rate and the number of withholding allowances claimed by the employee.

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Question 63

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Uncertainties such as natural disasters are:

Experience shows that the default rate on liabilities increases sharply when times interest earned falls below 1.5 to 2.0 and remains at that level or lower for several time periods.

A potential lawsuit claim is disclosed when the claim can be reasonably estimated and it is reasonably possible.

The Form W-2 must be given to employees before January 31 following the year covered by the Form W-2.

What are estimated liabilities? Cite at least two examples and explain why they are classified as estimated liabilities.

Which of the following do not apply to unearned revenues?

Estimated liabilities commonly arise from all of the following except:

A short-term note payable:

Required payroll deductions include income taxes,Social Security taxes,pension and health contributions,union dues,and donations.

A company has three employees.Total salaries for the month of January were $8,000.The federal income tax rate for all employees is 15%.The FICA-social security tax rate is 6.2% and the FICA-Medicare tax rate is 1.45%.Calculate the amount of employee taxes withheld and prepare the company's journal entry to record the January payroll assuming these were the only deductions.

Gary Marks is paid on a monthly basis.For the month of January of the current year,he earned a total of $8,288.FICA tax for Social Security is 6.2% on the first $127,200 of earnings each calendar year and the FICA tax for Medicare is 1.45% of all earnings.The FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both unemployment taxes are applied to the first $7,000 of an employee's pay.The amount of Federal Income Tax withheld from his earnings was $1,375.17.What is the amount of the employer's payroll taxes expenses for this employee? (Round your intermediate calculations to two decimal places.)

The annual Federal Unemployment Tax Return is:

During the first week of January,an employee works 46 hours.For this company,workers earn 150% of their regular rate for hours in excess of 40 per week.Her pay rate is $16 per hour,and her wages are subject to no deductions other than FICA Social Security,FICA Medicare,and federal income taxes.The tax rate for Social Security is 6.2% of the first $127,200 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings.The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both unemployment taxes are applied to the first $7,000 of an employee's pay.The employee has $80 in federal income taxes withheld.What is the amount of this employee's net pay for the first week of January?

Accounting for contingent liabilities covers three possibilities: (1)The future event is probable and the amount cannot be reasonably estimated; (2)The future event is remote or unlikely to recur; (3)The likelihood of the liability to occur is impossible.

Employee vacation benefits:

Identify and explain the types of employer payroll taxes.

A company has a selling price of $1,800 each for its printers.Each printer has a 2 year warranty that covers replacement of defective parts.It is estimated that 2% of all printers sold will be returned under the warranty at an average cost of $150 each.During November,the company sold 30,000 printers,and 400 printers were serviced under the warranty at a total cost of $55,000.The balance in the Estimated Warranty Liability account at November 1 was $29,000.What is the company's warranty expense for the month of November?

Define liabilities and explain the difference between current and long-term liabilities.