Question 1

Current liabilities are:

Accepted Answer

Current liabilities are obligations that are due and to be paid out of current assets within one year. This includes accounts payable, accrued expenses, and short-term debt. Choices A and C are incorrect as they misstate the time frame for payment. Choice D is incorrect as it refers to contingent liabilities, which are not necessarily payable.

Question 2

The journal entry a company uses to record the issuance of an interest-bearing note for the purpose of borrowing funds for the business is

Accepted Answer

The answer of The journal entry a company uses to...

Question 3

On January 5,2014,Garrett Company,a calendar-year company,issued $1,000,000 of notes payable,of which $200,000 is due on January 1 for each of the next five years.The proper balance sheet presentation on December 31,2014,is

Accepted Answer

The $200,000 due within the next year should be classified as a current liability, while the remaining $800,000 should be classified as long-term debt. Therefore, the proper balance sheet presentation is Current Liabilities, $200,000; Long-term Debt, $800,000.

Question 4

Mobile Co.issued a $45,000,60-day,discounted note to Guarantee Bank.The discount rate is 6%.At maturity,assuming a 360-day year,the borrower will pay:

Accepted Answer

The answer of Mobile Co.issued a $45,000,60-day,discounted note to Guarantee...

Question 5

Chang Co.issued a $50,000,120-day,discounted note to Guarantee Bank.The discount rate is 6%.Assuming a 360-day year,the cash proceeds to Chang Co.are

Accepted Answer

The cash proceeds can be calculated using the formula for the discount: Proceeds = Face Value - (Face Value * Discount Rate * (Time/360)). Here, it's $50,000 - ($50,000 * 6% * (120/360)) = $50,000 - $1,000 = $49,000.

Question 6

Grayson Bank agrees to lend the Trust Company $120,000 on January 1.Trust Company signs a $120,000,8%,9-month note.The entry made by Trust Company on January 1 to record the proceeds and issuance of the note is:

Accepted Answer

The entry made by the Trust Company on January 1 to record the proceeds and issuance of the note is a simple journal entry that would involve only the debiting of Cash for $120,000 and the crediting of Notes Payable for $120,000. No interest expense or payable should be recorded on this day as interest accrues over time and is not paid upfront.

Question 7

Which of the following would be used to compute the federal income taxes to be withheld from an employee's earnings?

Accepted Answer

Wage bracket and withholding tables are used by employers to determine the amount of federal income tax to withhold from an employee's pay based on their wages and the number of allowances they claim on their W-4 form. FICA tax rate is used to calculate Social Security and Medicare taxes, while FUTA tax rate is used to calculate federal unemployment tax. Wage and tax statements are used to report and summarize an employee's earnings and taxes withheld throughout the year.

Question 8

Which statement below is not a determinate in calculating the amount of federal income taxes withheld from an individuals pay?

Accepted Answer

The answer of Which statement below is not a determinate...

Question 9

A current liability is a debt that is reasonably expected to be paid

Accepted Answer

A current liability is a debt that is expected to be paid within one year from the balance sheet date or within the normal operating cycle of the business, whichever is longer.

Question 10

Assuming a 360-day year,proceeds of $48,750 were received from discounting a $50,000,90-day note at a bank.The discount rate used by the bank in computing the proceeds was

Accepted Answer

The answer of Assuming a 360-day year,proceeds of $48,750 were...

Question 11

The journal entry to record the conversion of an $4,700 accounts payable to a notes payable would be:

Accepted Answer

The conversion of accounts payable to notes payable means that the company has borrowed money to pay off the accounts payable. Therefore, the accounts payable account will decrease, and the notes payable account will increase. This transaction only involves liabilities, not assets or revenue, so options A and B are not appropriate. Option C is incorrect because it implies that the company received cash when converting the accounts payable to notes payable, which is not necessarily the case. Option D correctly and appropriately records the decrease in accounts payable and the increase in notes payable.

Question 12

The current portion of long-term debt should

Accepted Answer

The current portion of long-term debt represents the portion of a long-term debt that is due to be paid within one year. Thus, it should be reclassified as a current liability on the balance sheet.

Question 13

Which of the following would most likely be classified as a current liability?

Accepted Answer

Unearned rent is a liability that arises when a tenant pays rent in advance, but the landlord has not yet earned that rent. It is a current liability because it will be earned within a year, unlike long-term liabilities such as notes payable, bonds payable, or mortgage payable.

Question 14

The amount of federal income taxes withheld from an employee's gross pay is recorded as a(n)

Accepted Answer

The amount of federal income taxes withheld from an employee's gross pay is a liability to the employer as they are responsible for remitting this withheld amount to the government on behalf of the employee.

Question 15

The journal entry a company uses to record the payment of a discounted note is

Accepted Answer

The answer of The journal entry a company uses to...

Question 16

The journal entry a company uses to record the issuance of a note for the purpose of converting an existing account payable would be

Accepted Answer

When a company issues a note to convert an existing account payable, the account payable decreases and the notes payable increases, as the company has exchanged a short-term liability (account payable) for a long-term liability (notes payable). Therefore, the appropriate journal entry would be to debit Accounts Payable (to decrease it) and credit Notes Payable (to increase it).

Question 17

The journal entry a company uses to record the payment of an interest-bearing note is

Accepted Answer

When a company pays an interest-bearing note, it is necessary to record two transactions: one for the payment of the principal amount of the note and another for the payment of the interest. The journal entry to record the payment of the principal amount is to debit Notes Payable and credit Cash. The journal entry to record the payment of the interest is to debit Interest Expense (or Interest Payable, if the interest has not yet been recorded as an expense) and Notes Payable, and credit Cash. Therefore, choice C is the correct answer as it records both payments in a single transaction.

Question 18

The journal entry a company uses to record the issuance of a discounted note for the purpose of borrowing funds for the business is

Accepted Answer

The answer of The journal entry a company uses to...

Question 19

Assuming a 360-day year,when a $30,000,90-day,5% interest-bearing note payable matures,total payment will amount to:

Accepted Answer

The interest on the note payable can be calculated as:  
Interest = Principal x Rate x Time  
where Principal is the amount of the note payable, Rate is the interest rate per year, and Time is the number of days the note is outstanding divided by the number of days in a year.  
So, Interest = $30,000 x 5% x (90/360) = $375  
The total payment on the note payable will be the sum of the principal and the interest:  
Total payment = $30,000 + $375 = $30,375

Question 20

On October 30,Seba Salon,Inc.issued a 90-day note with a face amount of $60,000 to Reyes Products,Inc.for merchandise inventory.Assuming a 360-day year,determine the proceeds of the note assuming the note is discounted at 8%.

Accepted Answer

The formula for discounting a note is:
Proceeds = Face amount / (1 + discount rate * time)
In this case, the discount rate is 8% and the time is 90/360 = 0.25 years, so we can plug in the values and solve for proceeds:
Proceeds = $60,000 / (1 + 0.08 * 0.25) = $58,800. Therefore, the correct answer is C.

Quiz 10: Current Liabilities and Payroll

Current liabilities are:

The journal entry a company uses to record the issuance of an interest-bearing note for the purpose of borrowing funds for the business is

On January 5,2014,Garrett Company,a calendar-year company,issued $1,000,000 of notes payable,of which $200,000 is due on January 1 for each of the next five years.The proper balance sheet presentation on December 31,2014,is

Mobile Co.issued a $45,000,60-day,discounted note to Guarantee Bank.The discount rate is 6%.At maturity,assuming a 360-day year,the borrower will pay:

Chang Co.issued a $50,000,120-day,discounted note to Guarantee Bank.The discount rate is 6%.Assuming a 360-day year,the cash proceeds to Chang Co.are

Grayson Bank agrees to lend the Trust Company $120,000 on January 1.Trust Company signs a $120,000,8%,9-month note.The entry made by Trust Company on January 1 to record the proceeds and issuance of the note is:

Which of the following would be used to compute the federal income taxes to be withheld from an employee's earnings?

Which statement below is not a determinate in calculating the amount of federal income taxes withheld from an individuals pay?

A current liability is a debt that is reasonably expected to be paid

Assuming a 360-day year,proceeds of $48,750 were received from discounting a $50,000,90-day note at a bank.The discount rate used by the bank in computing the proceeds was

The journal entry to record the conversion of an $4,700 accounts payable to a notes payable would be:

The current portion of long-term debt should

Which of the following would most likely be classified as a current liability?

The amount of federal income taxes withheld from an employee's gross pay is recorded as a(n)

The journal entry a company uses to record the payment of a discounted note is

The journal entry a company uses to record the issuance of a note for the purpose of converting an existing account payable would be

The journal entry a company uses to record the payment of an interest-bearing note is

The journal entry a company uses to record the issuance of a discounted note for the purpose of borrowing funds for the business is

Assuming a 360-day year,when a $30,000,90-day,5% interest-bearing note payable matures,total payment will amount to:

On October 30,Seba Salon,Inc.issued a 90-day note with a face amount of $60,000 to Reyes Products,Inc.for merchandise inventory.Assuming a 360-day year,determine the proceeds of the note assuming the note is discounted at 8%.