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


A) debit Cash; credit Accounts Payable
B) debit Accounts, Payable; credit Cash
C) debit Cash; credit Notes Payable
D) debit Accounts Payable; credit Notes Payable

E) A) and D)
F) B) and C)

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List five internal controls that relate directly to payroll.

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All of the cash payment controls.
Proper...

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A business borrowed $40,000 on March 1 of the current year by signing a 60-day, 9% interest bearing note. Assuming a 360-day year, when the note is paid on April 30, the entry to record the payment should include a


A) debit to Interest Payable $600
B) debit to Interest Expense $600
C) credit to Cash for $40,000
D) credit to Cash for $46,300

E) C) and D)
F) B) and D)

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Amounts withheld from each employee for Social Security and Medicare varies by state.

A) True
B) False

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All long-term liabilities eventually become current liabilities.

A) True
B) False

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


A) debit Notes Payable and Interest Expense; credit Cash
B) debit Notes Payable; credit Cash
C) debit Cash; credit Notes Payable
D) debit Accounts Payable; credit Cash

E) A) and B)
F) None of the above

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The following totals for the month of June were taken from the payroll register of Young Company: The following totals for the month of June were taken from the payroll register of Young Company: The entry to record the accrual of employer's payroll taxes would include a A) debit to Payroll Taxes Expense for $2,498 B) debit to Social Security and Medicare Tax Payable for $2,250 C) debit to Payroll Taxes Expense for $1,373 D) Debit to Payroll Tax Expense for $1,125 The entry to record the accrual of employer's payroll taxes would include a


A) debit to Payroll Taxes Expense for $2,498
B) debit to Social Security and Medicare Tax Payable for $2,250
C) debit to Payroll Taxes Expense for $1,373
D) Debit to Payroll Tax Expense for $1,125

E) All of the above
F) C) and D)

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Which of the following will have no effect on an employee's take-home pay?


A) Social security tax
B) Unemployment tax
C) Marital status
D) Number of exemptions claimed

E) A) and C)
F) A) and D)

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The journal entry a company uses to record pension rights that have not been funded for its salaried employees, at the end of the year is


A) debit Salary Expense; credit Cash
B) debit Pension Expense; credit Unfunded Pension Liability
C) debit Pension Expense; credit Unfunded Pension Liability and Cash
D) debit Pension Expense; credit Cash

E) B) and C)
F) A) and D)

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The cost of a product warranty should be included as an expense in the


A) period the cash is collected for a product sold on account
B) future period when the cost of repairing the product is paid
C) period of the sale of the product
D) future period when the product is repaired or replaced

E) None of the above
F) All of the above

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


A) debit Cash and Interest Expense; credit Notes Payable
B) debit Cash and Interest Payable; credit Notes Payable
C) debit Accounts Payable; credit Notes Payable
D) debit Notes Payable; credit Cash

E) C) and D)
F) All of the above

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


A) FICA tax rate
B) wage and tax statement
C) FUTA tax rate
D) wage bracket and withholding table

E) A) and D)
F) C) and D)

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An employee receives an hourly rate of $15, with time and a half for all hours worked in excess of 40 during the week. Payroll data for the current week are as follows: hours worked, 48; federal income tax withheld, $120; cumulative earnings for the year prior to this week, $24,500; Social security tax rate, 6% on maximum of $100,000; and Medicare tax rate, 1.5% on all earnings; state unemployment compensation tax, 3.4% on the first $7,000; federal unemployment compensation tax, .8% on the first $7,000. What is the net amount to be paid to the employee?


A) $568.74
B) $601.50
C) $660.00
D) $574.90

E) A) and B)
F) A) and C)

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On June 8, Alton Co. issued an $80,000, 6%, 120-day note payable on an overdue account payable to Seller Co. Assume that the fiscal year of Alton Co. ends June 30. Which of the following relationships is true?


A) Alton is the creditor and credits Accounts Receivable
B) Seller is the creditor and debits Accounts Receivable
C) Seller is the borrower and credits Accounts Payable
D) Alton is the borrower and debits Accounts Payable

E) B) and C)
F) A) and B)

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Prior to the last weekly payroll period of the calendar year, the cumulative earnings of employees A and B are $99,350 and $91,000 respectively. Their earnings for the last completed payroll period of the year are $850 each. The maximum amount of earnings subject to social security tax at 6% is $100,000. All earnings are subject to Medicare tax of 1.5%. Assuming that the payroll will be paid on December 29, what will be the employer's total FICA tax for this payroll period on the two salary amounts of $850 each?


A) $127.50
B) $115.50
C) $112.50
D) $0

E) A) and D)
F) A) and C)

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Payroll taxes only include social security taxes and federal unemployment and state unemployment taxes.

A) True
B) False

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Zennia Company provides its employees with varying amount of vacation per year, depending on the length of employment. The estimated amount of the current year's vacation cost is $135,000. The journal entry to record the adjusting entry required on December 31, the end of the current year, to record the current month's accrued vacation pay is


A) $135,000
B) $67,500
C) $0
D) $11,250

E) A) and B)
F) All of the above

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Use the following information to answer the following questions. The following totals for the month of April were taken from the payroll register of Magnum Company. Use the following information to answer the following questions. The following totals for the month of April were taken from the payroll register of Magnum Company. The entry to record accrual of employer's payroll taxes would include a A) debit to Payroll Tax Expense for $248 B) debit to FICA Taxes Payable for $1,800 C) credit to Payroll Tax Expense for $248 D) debit to Payroll Tax Expense for $1,148 The entry to record accrual of employer's payroll taxes would include a


A) debit to Payroll Tax Expense for $248
B) debit to FICA Taxes Payable for $1,800
C) credit to Payroll Tax Expense for $248
D) debit to Payroll Tax Expense for $1,148

E) None of the above
F) B) and C)

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Quick assets include


A) cash; cash equivalents, receivables, prepaid expenses, and inventory
B) cash; cash equivalents, receivables, and prepaid expenses
C) cash; cash equivalents, receivables, and inventory
D) cash; cash equivalents, and receivables

E) C) and D)
F) B) and D)

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In order to be a recorded contingent liability, the liability must be possible and easily estimated.

A) True
B) False

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