Question 1

A company's income before interest expense and income taxes in 2010 and 2011 is $225,000 and $200,000, respectively. Its interest expense was $45,000 for both years. Calculate the company's times interest earned ratio, and comment on its level of risk.

Accepted Answer

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Question 2

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 0.8% 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.

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Question 3

Agro Depot's income before interest expense and income taxes was $5,909 million, and interest expense was $37 million. Calculate Agro Depot's times interest earned.

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Question 4

The tax rate for FICA-social security is 6.2% and the tax rate for FICA-Medicare is 1.45%. Calculate the total amount of FICA withholding for an employee whose pay is $2,400 and is entirely subject to these FICA taxes.

Accepted Answer

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Question 5

A company has 90 employees and a weekly payroll of $117,000. The FICA-social security tax rate is 6.2% and the FICA-Medicare tax rate is 1.45%. The total withholding for federal income tax is $16,500 for the current week. Calculate the amount of FICA taxes owed (assuming no employee's salary is over the FICA limit) and prepare the journal entry to accrue this week's salaries expense and withholdings.

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Question 6

A company's income before interest expense and income taxes is $302,400, and its interest expense is $72,000. Calculate the company's times interest earned ratio.

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Question 7

On December 1, Gates Company borrowed $45,000 cash from FirstBank by signing a 90-day, 9% note payable.
a. Prepare Gate's journal entry to record the issuance of the note payable.
b. Prepare Gate's journal entry to record the accrued interest due at December 31.
c. Prepare Gate's journal entry to record the payment of the note on March 1 of the next year.

Accepted Answer

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Question 8

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

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Question 9

A company has 2 employees. The company's total salaries for the month of January were $8,000. The federal income tax rate for both 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.

Accepted Answer

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Question 10

A company borrowed $60,000 by signing a 60-day, 10% note payable from its bank. Compute the total cash payment due on the note's maturity date.

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Question 11

A company's income before interest expense and income taxes in 2010 and 2011 is $395,000 and $427,000, respectively. Its fixed interest expense was $125,000 for both years. Calculate the company's times interest earned ratio, and comment on its level of risk.

Accepted Answer

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Question 12

Identify and discuss the factors involved in computing federal income taxes for employees.

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Question 13

Metro Express has 5 sales employees, each of whom earns $4,000 per month and is paid on the last working day of the month. Each employee's wages are subject to FICA social security taxes of 6.2% and Medicare taxes of 1.45% on all wages. Withholding for each employee also includes federal income tax of 16% and monthly medical insurance premiums of $110 for each employee.
a. Prepare the general journal entry to accrue the monthly sales salaries expense at January 31.
b. The employer payroll taxes for Metro Express include FICA taxes, federal unemployment taxes of 0.8% of the first $7,000 paid each employee, and state unemployment taxes of 4.0% of the first $7,000 paid to each employee. Prepare the journal entry to record the employer's payroll taxes at January 31 for Metro Express. (Assume that none of the employees has reached the unemployment limit of $7,000.)

Accepted Answer

The answer of Metro Express has 5 sales employees, each...

Question 14

On June 1, Martin Company signed a $25,000, 120-day, 6% note payable to cover a past due account payable.
a. What is the total amount of interest to be paid on this note?
b. Prepare Martin Company's general journal entry to record the issuance of the note payable.
c. Prepare Martin Company's general journal entry to record the payment of the note on September 29.

Accepted Answer

The answer of On June 1, Martin Company signed a...

Question 15

On September 15, SportsWorld borrowed $75,000 cash from FirstBank by signing a 12%, 60-day note payable.
a. Prepare SportsWorld's journal entry to record the issuance of the note payable.
b. Prepare SportsWorld's journal entry to record the payment of the note at maturity.

Accepted Answer

The answer of On September 15, SportsWorld borrowed $75,000 cash...

Question 16

ZMart had income before interest expense and income taxes of $12,581 million and interest expense of $1,063 million. XMart 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.

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Question 17

Calco had income before interest expense and income taxes of $5,698 million and interest expense of $399 million. Calculate Calco's times interest earned.

Accepted Answer

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Question 18

A company had income before interest expense and income taxes of $176,000, and its interest expense is $55,000. Calculate the company's times interest earned ratio.

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Question 19

An employee earned $3,450 for the current period. Calculate the total and individual amounts to be withheld for social security (6.2%), Medicare (1.45%) and federal income tax (15%) assuming the entire employee's pay is subject to FICA taxes.

Accepted Answer

The answer of An employee earned $3,450 for the current...

Question 20

On November 1, Bob's Skateboards signed a $12,000, 90-day, 5% note payable to cover a past due account payable.
a. What amount of interest expense on this note should Bob's Skateboards report on year-end December 31?
b. Prepare Bob's journal entry to record the issuance of the note payable.
c. Prepare Bob's journal entry to record the payment of the note on February 1 of the following year.

Accepted Answer

The answer of On November 1, Bob's Skateboards signed a...

Quiz 11: Current Liabilities and Payroll Accounting

A company's income before interest expense and income taxes in 2010 and 2011 is $225,000 and $200,000, respectively. Its interest expense was $45,000 for both years. Calculate the company's times interest earned ratio, and comment on its level of risk.

Agro Depot's income before interest expense and income taxes was $5,909 million, and interest expense was $37 million. Calculate Agro Depot's times interest earned.

The tax rate for FICA-social security is 6.2% and the tax rate for FICA-Medicare is 1.45%. Calculate the total amount of FICA withholding for an employee whose pay is $2,400 and is entirely subject to these FICA taxes.

A company's income before interest expense and income taxes is $302,400, and its interest expense is $72,000. Calculate the company's times interest earned ratio.

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

A company borrowed $60,000 by signing a 60-day, 10% note payable from its bank. Compute the total cash payment due on the note's maturity date.

A company's income before interest expense and income taxes in 2010 and 2011 is $395,000 and $427,000, respectively. Its fixed interest expense was $125,000 for both years. Calculate the company's times interest earned ratio, and comment on its level of risk.

Identify and discuss the factors involved in computing federal income taxes for employees.

On September 15, SportsWorld borrowed $75,000 cash from FirstBank by signing a 12%, 60-day note payable. a. Prepare SportsWorld's journal entry to record the issuance of the note payable. b. Prepare SportsWorld's journal entry to record the payment of the note at maturity.

Calco had income before interest expense and income taxes of $5,698 million and interest expense of $399 million. Calculate Calco's times interest earned.

A company had income before interest expense and income taxes of $176,000, and its interest expense is $55,000. Calculate the company's times interest earned ratio.

An employee earned $3,450 for the current period. Calculate the total and individual amounts to be withheld for social security (6.2%), Medicare (1.45%) and federal income tax (15%) assuming the entire employee's pay is subject to FICA taxes.