Question 1

The entry to record the issuance of a note for cash was recorded with a debit to Cash and a credit to Notes Receivable.The effect of recording this entry causes:

Accepted Answer

The issuance of a note for cash results in an increase in both assets (Notes Receivable) and liabilities (the obligation to repay the note). However, the entry recorded debited Cash, which means that the company received cash and recognized an increase in its assets. Since the credit was made to Notes Receivable, this account increased and correctly reflects the additional liability of the note. Therefore, this entry correctly reflects the transaction and does not cause any overstatement or understatement in stockholders' equity. However, if the company had mistakenly debited Notes Receivable instead of Cash, then stockholders' equity would have been overstated.

Question 2

On September 1,ABC Company borrowed $50,000 on a 6%,9month note payable to XYZ National Bank.Given no previous adjusting entries have been recorded,ABC's adjusting entry four months later at December 31 would include a:

Accepted Answer

The interest for four months is calculated as $50,000 * 6% * (4/12) = $1,000.

Question 3

The entry to record the initial borrowing of cash by issuing a promissory note will include a debit to ______ and a credit to ______:

Accepted Answer

The answer of The entry to record the initial borrowing...

Question 4

Texable,Inc.is required to match $45,900 for its portion of FICA and $4,700 for federal and state unemployment taxes.The entry to record Texable's payroll taxes includes:

Accepted Answer

The payroll tax expense includes both the FICA and unemployment taxes, so the total expense is $45,900 + $4,700 = $50,600, which is debited to Payroll Tax Expense.

Question 5

If a company forgets to record the journal entry to accrue interest expense,then its net income is too ______ and its liabilities are too ______:

Accepted Answer

The answer of If a company forgets to record the...

Question 6

Payroll deductions:

Accepted Answer

Payroll deductions are amounts subtracted from employees' gross earnings to determine their net pay. These deductions may include taxes, contributions to retirement plans or healthcare benefits, as well as any other authorized deductions such as union dues or wage garnishments.

Question 7

The Payroll records of Oregon Mist contained the following information for the month of November:

The journal entry to record the monthly Payroll Tax Expense would include a:

Accepted Answer

The monthly Payroll Tax Expense is the total amount of all the payroll taxes owed by the employer, which in this case is the sum of FICA Taxes, Federal Unemployment Tax (FUTA), and State Unemployment Tax (SUTA).

To calculate the Payroll Tax Expense, we need to add up the amounts of FICA Taxes, FUTA, and SUTA given in the payroll records:

FICA Taxes = $43,400
FUTA = $25,200 x 0.6% = $151.20
SUTA = $25,200 x 2.7% = $680.40

Payroll Tax Expense = FICA Taxes + FUTA + SUTA = $43,400 + $151.20 + $680.40 = $44,231.60

So the journal entry to record the Payroll Tax Expense would be:

Debit Payroll Tax Expense $26,950 
Credit FICA Taxes Payable $43,400 
Credit FUTA Payable $151.20
Credit SUTA Payable $680.40

Question 8

The journal entry to record employer payroll taxes affects:

Accepted Answer

The answer of The journal entry to record employer payroll...

Question 9

Accruing a liability always involves ______ expenses and ______ liabilities.

Accepted Answer

The answer of Accruing a liability always involves ______ expenses...

Question 10

Gross earnings for the pay period are $100,000.Required payroll deductions are: Social Security $6,700; Medicare $1,450; Federal Income tax $18,000 and State income tax $3,850.The journal entry to record wages paid includes a:

Accepted Answer

The journal entry to record wages paid would include a debit to Salaries and Wages Expense for the gross earnings of $100,000, and credits to several accounts including Salaries and Wages Payable, FICA Payable, Federal Income Tax Payable, and State Income Tax Payable for the amount of each respective deduction. Therefore, choice C) is the correct answer as it reflects the debit to Salaries and Wages Expense. Choices A) and B) are incorrect as they do not reflect the entire transaction, and choice D) is incorrect as it only accounts for the net pay after deductions.

Question 11

The following 12%,$1,000 notes were issued on December 1.Which of the following is the correct method of calculation for the interest accrued as of December 31 of the same year on each of the notes described?

Accepted Answer

The correct method of calculation for interest accrued on a note is to multiply the principal amount by the interest rate and the time period for which the interest is being calculated.

For a 4-month note, the time period for which the interest is being calculated is 1/3 of a year (4 months is 1/3 of a year). Therefore, the correct calculation for the interest accrued as of December 31 is:

$1,000 x 12% x 1/3 = $40

Question 12

John Smith works 40 hours for ABC Corp.for $15 per hour.Required payroll deductions are: Social Security $37.20; Medicare $8.70; Federal income tax $58; and State income tax $10.The entry to record his net pay would cause which of the following to change as described?

Accepted Answer

The answer of John Smith works 40 hours for ABC...

Question 13

On November 1,2015,ABC Corp.borrowed $100,000 cash on a 1year note payable with a 6% annual rate that requires ABC to pay all the interest as well as the principal on October 31,2016.Assuming the November 1 transaction was properly recorded,how would the December 31,2015,year-end adjusting entry affect the accounting equation?

Accepted Answer

The adjusting entry would recognize the accrued interest expense, increasing liabilities (interest payable) and decreasing stockholders' equity (retained earnings) due to the expense recognition.

Question 14

Acme Enterprises began the year owing its suppliers $3,000 for merchandise purchased last year.Acme then sold half of this merchandise for $5,000 on account.Two weeks later,Acme paid its suppliers $1,000 and bought another $4,000 of merchandise on account.Acme now has an Accounts Payable balance of:

Accepted Answer

Acme started with $3,000 in Accounts Payable, paid $1,000, and then purchased $4,000 more, resulting in a balance of $6,000.

Question 15

The entry to record the initial borrowing of cash by issuing a promissory note causes a(n):

Accepted Answer

Issuing a promissory note is a liability for the company because it is a promise to repay the borrowed cash. Therefore, the entry to record it will cause an increase in liabilities.

Question 16

Employees' gross earnings differ from their net pay because of:

Accepted Answer

Gross earnings are the total amount of money earned by an employee before taxes or other deductions are taken out. Net pay, on the other hand, is the amount of money an employee receives after all deductions are taken out, such as federal and state income taxes, Social Security taxes, and health insurance premiums. Therefore, the difference between gross earnings and net pay is due to payroll deductions.

Question 17

Issuing a note payable for cash immediately results in a(n):

Accepted Answer

The answer of Issuing a note payable for cash immediately...

Question 18

On November 1,2015,ABC Corp.borrowed $100,000 cash on a 1year,6% note payable that requires ABC to pay both principal and interest on October 31,2016.Given no prior adjusting entries have been recorded,the adjusting journal entry on December 31,2015,ABC's year end,would include a:

Accepted Answer

The adjusting entry on December 31, 2015, would include a credit to Interest Payable of $1,000 to recognize the interest accrued for two months (November and December) on the note payable. The interest for two months is calculated as $100,000 * 6% * (2/12) = $1,000.

Question 19

The law requires ______ to pay FICA taxes.

Accepted Answer

FICA taxes are split between the employee and employer. The employer withholds the employee's portion from their paycheck and also contributes an additional amount on behalf of the employee.

Question 20

Gross earnings for the pay period are $100,000.Required payroll deductions are: Social Security $6,700; Medicare $1,450; Federal Income tax $18,000 and State income tax $3,850.What is the net pay to employees?

Accepted Answer

The answer of Gross earnings for the pay period are...

Quiz 10: Reporting and Interpreting Liabilities

The entry to record the issuance of a note for cash was recorded with a debit to Cash and a credit to Notes Receivable.The effect of recording this entry causes:

On September 1,ABC Company borrowed $50,000 on a 6%,9month note payable to XYZ National Bank.Given no previous adjusting entries have been recorded,ABC's adjusting entry four months later at December 31 would include a:

The entry to record the initial borrowing of cash by issuing a promissory note will include a debit to and a credit to :

Texable,Inc.is required to match $45,900 for its portion of FICA and $4,700 for federal and state unemployment taxes.The entry to record Texable's payroll taxes includes:

If a company forgets to record the journal entry to accrue interest expense,then its net income is too and its liabilities are too :