1.
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Using the following information, calculate total current liabilities for the company: Allowance for uncollectible accounts $1,000, current portion of long-term debt $2,000, employee withholding taxes payable $3,000, and estimated vacation pay liability $4,000.
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| $5,000 |
| $7,000 |
| $9,000 |
| $10,000 |
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2.
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In the first year of operation, a company reported sales revenue of $100,000. Estimated warranty costs for this year are 3% of sales. The warranty period extends for three years. This year, $900 of warranty costs were actually incurred. Select the following statement that is true regarding warranty expense reported on the income statement, and warranty liability reported on the year-end balance sheet.
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| Warranty expense of $900, and warranty liability of $100 would be reported on the financial statements. |
| Warranty expense of $1,000, and warranty liability of $100 would be reported on the financial statements. |
| Warranty expense of $1,000, and warranty liability of $2,100 would be reported on the financial statements. |
| Warranty expense of $3,000, and warranty liability of $2,100 would be reported on the financial statements. |
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3.
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All of the following increase current liabilities except __________.
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| a customer paying cash for two years of magazine subscriptions from the company. |
| record accrued interest on a note payable at the end of the year. |
| record estimated income tax payable at the end of the year. |
| paying off salaries that have previously been accrued. |
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4.
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A $10,000, 6-month, 8% note payable is due April 1, 19X2. Select the following statement that is true regarding interest expense reported on the 19X1 income statement, and note payable reported on the 12/31/19X1 balance sheet.
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| Interest expense of $200, and note payable of $10,000 would be reported on the financial statements. |
| Interest expense of $200, and note payable of $10,200 would be reported on the financial statements. |
| Interest expense of $400, and note payable of $10,000 would be reported on the financial statements. |
| Interest expense of $400, and note payable of $10,400 would be reported on the financial statements. |
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5.
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All of the following are payroll deductions that reduce an employee’s gross pay to net pay except __________.
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| federal income tax withheld for the employee. |
| social security tax (FICA) withheld for the employee. |
| federal unemployment tax (FUTA) paid by the employer. |
| United Way contributions withheld on behalf of the employee. |
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6.
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Use the following information to answer questions 6 and 7. Gross pay $10,000, federal income tax withheld $2,000, FICA (social security) rate 8%, SUTA (state unemployment tax) rate 5.4%, and the FUTA (federal unemployment tax) rate .8%. All of the following statements are true regarding the payroll entry except __________.
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| gross pay of $10,000 is recorded as salary expense. |
| net pay of $7,200 is recorded as salary payable. |
| $800 is deducted for social security taxes. |
| All of the above are true. |
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7.
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Use the following information to answer questions 6 and 7. Gross pay $10,000, federal income tax withheld $2,000, FICA (social security) rate 8%, SUTA (state unemployment tax) rate 5.4%, and the FUTA (federal unemployment tax) rate .8%. All of the following are considered payroll taxes that increase the employer’s total payroll costs except __________.
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| employer FUTA payable of $80. |
| employer SUTA payable of $540. |
| employer FICA tax payable of $800. |
| employee federal income tax payable of $2,000. |
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8.
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All of the following statements are true except __________.
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| sales tax is levied on sales by retailers and sales by manufactures. |
| salaries and wages are usually the largest expense of companies within the service industry. |
| many companies disburse paychecks from a special payroll bank account for greater control and analysis. |
| the IRS matches the amount an employer reports as wages paid to the amount reported by the employee on the individual tax return. |
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9.
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Use the following information to answer questions 9-12. The 12/31/19X4 year-end adjusted trial balance reported: Note payable (due in five years) $50,000, estimated warranty payable $3,000, interest payable $1,000, warranty expense $7,000, and interest expense $4,000. As of 12/31/19X4, warranty costs expected to be incurred in the future total __________.
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| $3,000. |
| $4,000. |
| $7,000. |
| $10,000. |
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10.
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Use the following information to answer questions 9-12. The 12/31/19X4 year-end adjusted trial balance reported: Note payable (due in five years) $50,000, estimated warranty payable $3,000, interest payable $1,000, warranty expense $7,000, and interest expense $4,000. The amount of interest that accrued during the year, and is still owing at year-end, totals __________.
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| $1,000. |
| $3,000. |
| $4,000. |
| $5,000. |
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11.
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Use the following information to answer questions 9-12. The 12/31/19X4 year-end adjusted trial balance reported: Note payable (due in five years) $50,000, estimated warranty payable $3,000, interest payable $1,000, warranty expense $7,000, and interest expense $4,000. The 12/31/19X4 balance sheet would report current liabilities totaling __________.
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| $1,000. |
| $15,000. |
| $54,000. |
| none of the above. |
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12.
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Use the following information to answer questions 9-12. The 12/31/19X4 year-end adjusted trial balance reported: Note payable (due in five years) $50,000, estimated warranty payable $3,000, interest payable $1,000, warranty expense $7,000, and interest expense $4,000. The 12/31/19X4 balance sheet would report total liabilities of __________.
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| $14,000. |
| $54,000. |
| $65,000. |
| none of the above. |
