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Exam 9: Accounting for Current Liabilities

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Question 111

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Explain how to calculate times interest earned and how it is used to analyze a company's risk.

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The times interest earned ratio is calcu...

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Question 112

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A ________ is a potential obligation that depends on a future event arising from a past transaction or event.

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contingent...

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Question 113

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A company has 90 employees and a weekly payroll of $117,000.The FICA-social security tax withheld totals $7,254 and the FICA-Medicare tax withheld totals $1,696.50.The total withholding for federal income tax is $16,500.Prepare the journal entry to accrue this week's salaries expense and withholdings.

A company has interest expense of $52,000,income taxes expense of $121,000,and net income of $281,000.The company's times interest earned ratio equals:

Trey Morgan is an employee who is paid monthly.For the month of January of the current year,he earned a total of $4,538.The FICA tax for social security is 6.2% of the first $128,400 earned each calendar year,and the FICA tax rate for Medicare is 1.45% of all earnings for both the employee and the employer.The amount of federal income tax withheld from his earnings was $680.70.His net pay for the month is:

________ are amounts received in advance from customers for future products or services.

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

An employee earns $5,500 per month working for an employer.The FICA tax rate for Social Security is 6.2% of the first $128,400 of earnings 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 $182 in federal income taxes withheld.The employee has voluntary deductions for health insurance of $150 and contributes $75 to a retirement plan each month.What is the amount the employer should record as payroll taxes expense for the employee for the month of January?

An employee earned $100,000 working for an employer in the current year.The current rate for FICA Social Security is 6.2% payable on earnings up to $128,400 maximum per year and the rate for FICA Medicare 1.45% of all earnings.The employer's total FICA payroll tax for this employee is:

Carson Company sells sporting tickets in advance of the event for $500,000.The journal entry to record the sale is:

A contingent liability is:

Contingent liabilities are recorded or disclosed unless they are:

Banks authorized to accept deposits of amounts payable to the federal government,including amounts due for payroll taxes are ________.

All of the following statements regarding uncertainty in liabilities are true except:

FICA taxes include:

Amounts received in advance from customers for future products or services:

The payroll records of a company provided the following data for the weekly pay period ended December 7: The FICA social security tax rate is 6.2% and the FICA Medicare tax rate is 1.45% on all of this week's wages paid to each employee.The federal and state unemployment tax rates are 0.6% and 5.4%,respectively,on the first $7,000 paid to each employee.Prepare the journal entries to (a)accrue the payroll and (b)record payroll taxes expense.

All expected future payments are liabilities.

SaveMart had income before interest expense and income taxes of $12,581 million and interest expense of $1,063 million.Valueland had income before interest expense and income taxes of $3,596 million and interest expense of $1,143 million.Calculate the times interest earned for each company and comment on the results.