Deck 11: Current Liabilities and Payroll Accounting

Question 1

A contingent liability is:

A)Always of a specific amount.
B)A potential obligation that depends on a future event arising from a past transaction or event.
C)An obligation not requiring future payment.
D)An obligation arising from the purchase of goods or services on credit.
E)An obligation arising from a future event.

Answer 1

B

Question 2

Contingent liabilities are recorded or disclosed unless they are:

A)Probable and estimable.
B)Remote.
C)Reasonably possible.
D)Probable and not estimable.
E)Possible and estimable.

Answer 2

B

Question 3

Which of the following do not apply to unearned revenues?

A)Also called deferred revenues.
B)Amounts received in advance from customers for future delivery of products or services.
C)Also called collections in advance.
D)Also called prepayments.
E)Amounts to be received in the future from customers for delivery of products or services in the current period.

Answer 3

E

Question 4

The times interest earned ratio reflects:

A)A company's ability to pay its operating expenses on time.
B)A company's ability to pay interest even if sales decline.
C)A company's profitability.
D)The relation between income and debt.
E)The relation between assets and liabilities.

Question 5

In the accounting records of a defendant,lawsuits:

A)Are estimated liabilities.
B)Should always be recorded.
C)Should always be disclosed.
D)Should be recorded if payment for damages is probable and the amount can be reasonably estimated.
E)Should never be recorded.

Question 6

Times interest earned is calculated by:

A)Multiplying interest expense by income.
B)Dividing interest expense by income before interest expense.
C)Dividing income before interest expense and income taxes by interest expense.
D)Multiplying interest expense by income before interest expense.
E)Dividing income before interest expense by interest expense and income taxes.

Question 7

In order to be reported,liabilities must:

A)Be certain.
B)Sometimes be estimated.
C)Be for a specific amount.
D)Always have a definite date for payment.
E)Involve an outflow of cash.

Question 8

All of the following statements regarding liabilities are true except:

A)A liability is a probable future payment of assets or services.
B)Unearned future wages to be paid to employees should be recorded as liabilities.
C)For a liability to be reported,it must be a present obligation that results from a past transaction or event,and requires a future payment of assets or services.
D)Information about liabilities is more useful when the balance sheet identifies them as either current or long term.
E)Liabilities can involve uncertainty in whom to pay.

Question 9

Contingent liabilities must be recorded if:

A)The future event is probable and the amount owed can be reasonably estimated.
B)The future event is remote.
C)The future event is reasonably possible but not estimable.
D)The amount owed cannot be reasonably estimated.
E)The future event is probable but not estimable.

Question 10

Interest expense is not:

A)Incurred on current liabilities.
B)Likely to stay the same when sales change.
C)A fixed expense.
D)Likely to fluctuate when sales change.
E)A factor in determining a company's borrowing risk.

Question 11

All of the following statements regarding uncertainty in liabilities are true except:

A)Liabilities can involve uncertainty in whom to pay.
B)A company can create a liability with a known amount even when the holder of the note may not be known until the maturity date.
C)A company can have an obligation of a known amount to a known creditor but not know when it must be paid.
D)A company only records liabilities when it knows whom to pay,when to pay,and how much to pay.
E)A company can be aware of an obligation but not know how much will be required to settle it.

Question 12

All of the following are true of known liabilities except:

A)Include accounts payable,notes payable,and payroll.
B)Are obligations set by agreements,contracts,or laws.
C)Are measurable.
D)Are definitely determinable.
E)May depend on some future event occurring.

Question 13

If a company has advance ticket sales totaling $2,000,000 for the upcoming football season,the receipt of cash would be journalized as:

A)Debit Sales,credit Unearned Revenue.
B)Debit Unearned Revenue,credit Sales.
C)Debit Cash,credit Unearned Revenue.
D)Debit Unearned Revenue,credit Cash.
E)Debit Cash,credit Revenue.

Question 14

Obligations to be paid within one year or the company's operating cycle,whichever is longer,are:

A)Current assets.
B)Current liabilities.
C)Earned revenues.
D)Operating cycle liabilities.
E)Bills.

Question 15

When a company is obligated for sales taxes payable,it is reported as a(n):

A)Estimated liability.
B)Contingent liability.
C)Current liability.
D)Business expense.
E)Long-term liability.

Question 16

Obligations not expected to be paid within the longer of one year or the company's operating cycle are reported as:

A)Current assets.
B)Current liabilities.
C)Long-term liabilities.
D)Operating cycle liabilities.
E)Bills.

Question 17

Uncertainties such as natural disasters are:

A)Not contingent liabilities because they are future events not arising from past transactions or events.
B)Contingent liabilities because they are future events arising from past transactions or events.
C)Disclosed because of their usefulness to financial statements.
D)Estimated liabilities because the amounts are uncertain.
E)Reported in the same way as debt guarantees.

Question 18

Accounts payable are:

A)Amounts owed to suppliers for products and/or services purchased on credit.
B)Long-term liabilities.
C)Estimated liabilities.
D)Not usually due on specific dates.
E)Always payable within 30 days.

Question 19

Debt guarantees are:

A)Never disclosed in the financial statements.
B)Considered to be contingent liabilities.
C)A bad business practice.
D)Recorded as liabilities even though it is highly unlikely that the original debtor will default.
E)Considered to be current liabilities.

Question 20

Amounts received in advance from customers for future products or services:

A)Are revenues.
B)Increase income.
C)Are liabilities.
D)Are not allowed under GAAP.
E)Require an outlay of cash in the future.

Question 21

A company's income before interest expense and income taxes is $350,000 and its interest expense is $100,000.Its times interest earned ratio is:

A)0.29
B)3.50
C)2.50
D)1.75
E)0.50

Question 22

Recording employee payroll deductions may involve:

A)Liabilities to the employer.
B)Liabilities to federal and state governments.
C)Expenses for state unemployment.
D)Expenses for the gross wages and salaries.
E)Expenses for the employer portion of any medical insurance.

Question 23

On December 1,Victoria Company signed a 90-day,6% note payable,with a face value of $15,000.What amount of interest expense is accrued at December 31 on the note?

A)$0
B)$75
C)$900
D)$225
E)$300

Question 24

A company's fixed interest expense is $8,000,its income before interest expense and income taxes is $32,000.Its net income is $9,600.The company's times interest earned ratio equals:

A)0.25.
B)0.30.
C)0.83.
D)3.33.
E)4.0.

Question 25

Gross pay is:

A)Take-home pay.
B)Total compensation earned by an employee before any deductions.
C)Salaries after taxes are deducted.
D)Deductions withheld by an employer.
E)The amount of the paycheck.

Question 26

A short-term note payable:

A)Is a written promise to pay a specified amount on a definite future date within one year or the company's operating cycle,whichever is longer.
B)Is a contingent liability.
C)Is an estimated liability.
D)Is not a liability until the due date.
E)Cannot be used to extend the payment period for an account payable.

Question 27

On November 1,Alan Company signed a 120-day,8% note payable,with a face value of $9,000.What is the maturity value of the note on March 1?

A)$9,000
B)$720
C)$9,120
D)$9,720
E)$9,240

Question 28

If the times interest earned ratio:

A)Increases,then risk increases.
B)Increases,then risk decreases.
C)Is greater than 1.5,the company is in default.
D)Is less than 1.5,the company is carrying too little debt.
E)Is greater than 3.0,the company is likely carrying too much debt.

Question 29

The correct times interest earned computation is:

A)(Net income + Interest expense + Income taxes)/Interest expense.
B)(Net income + Interest expense - Income taxes)/Interest expense.
C)(Net income - Interest expense - Income taxes)/Interest expense.
D)(Net income - Interest expense + Income taxes)/Interest expense.
E)Interest expense/(Net income + Interest expense + Income taxes expense).

Question 30

On November 1,Alan Company signed a 120-day,8% note payable,with a face value of $9,000.What is the adjusting entry for the accrued interest at December 31 on the note?

A)Debit interest expense,$0;credit interest payable,$0.
B)Debit interest payable,$120;credit interest expense,$120.
C)Debit interest expense,$120;credit interest payable,$120.
D)Debit interest expense,$720;credit interest payable,$720.
E)Debit interest payable,$240;credit interest expense,$240.

Question 31

On November 1,Alan Company signed a 120-day,8% note payable,with a face value of $9,000.Alan made the appropriate year-end accrual.What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made?

A)Debit Notes Payable $9,000;debit Interest Payable $120;credit Cash $9,120.
B)Debit Cash $9,240;credit Notes Payable $9,240.
C)Debit Notes Payable $9,240;credit Interest Payable $120;credit Interest Expense $120;credit Cash $9,000.
D)Debit Notes Payable $9,000;debit Interest Payable $120;debit Interest Expense $120;credit Cash $9,240.
E)Debit Notes Payable $9,000;debit Interest Expense $240;credit Cash $9,240.

Question 32

Employers' responsibilities for payroll do not include:

A)Providing each employee with an annual report of his or her wages subject to FICA and federal income taxes along with the amount of these taxes withheld.
B)Filing Form 941,the Employer's Quarterly Federal Tax Return.
C)Filing Form 940,the Annual Federal Unemployment Tax Return.
D)Maintaining individual earnings records for each employee.
E)Recording an expense for the employee Federal Income Tax withholding.

Question 33

The amount of federal income taxes withheld from an employee's paycheck is determined by:

A)Current earnings for the pay period and number of withholding allowances the employee claims.
B)The employer's merit rating.
C)The amount of social security taxes withheld.
D)Multiplying the gross pay by 6.2%.
E)Tax tables provided by the state in which the employee works.

Question 34

The Federal Insurance Contributions Act (FICA)requires that each employer file a:

A)W-4.
B)Form 941.
C)Form 1040.
D)Form 1099.
E)W-2.

Question 35

Short-term notes payable:

A)Cannot replace an account payable.
B)Can be issued in return for money borrowed from a bank.
C)Are not negotiable.
D)Are a conditional promise to pay.
E)Rarely involve interest charges.

Question 36

An employee earned $37,000 during the year working for an employer when the maximum limit for Social Security was $117,000.The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%.The employee's annual FICA taxes amount is:

A)$2,294.00.
B)$536.50.
C)$2,830.50.
D)$1,757.50.
E)$8,950.50.

Question 37

A company's had fixed interest expense of $5,000,its income before interest expense and income taxes is $17,000,and its net income is $9,400.The company's times interest earned ratio equals:

A)0.5.
B)1.8.
C)1.9.
D)3.4.
E)0.3.

Question 38

The difference between the amount received from issuing a note payable and the amount repaid at maturity is referred to as:

A)Interest.
B)Principle.
C)Face Value.
D)Cash.
E)Accounts Payable.

Question 39

FICA taxes include:

A)Social Security and Medicare taxes.
B)Charitable giving.
C)Employee state income tax.
D)Federal and state unemployment taxes.
E)Employee federal income tax.

Question 40

The employer should record deductions from employee pay as:

A)Employee receivables.
B)Payroll taxes.
C)Current liabilities.
D)Wages payable.
E)Employee payables.

Question 41

An employer's federal unemployment taxes (FUTA)are reported:

A)Annually.
B)Semiannually.
C)Quarterly.
D)Monthly.
E)Weekly.

Question 42

Trey Morgan is an employee who is paid monthly.For the month of January of the current year,he earned a total of $4,538.The FICA tax for social security is 6.2% and the FICA tax rate for Medicare is 1.45% for both the employee and the employer.The amount of federal income tax withheld from his earnings was $680.70.What is the total amount of taxes withheld from the Trey's earnings?

A)$1,375.02
B)$746.50
C)$962.06
D)$1,027.86
E)$680.70

Question 43

Gary Marks is paid on a monthly basis.For the month of January of the current year,he earned a total of $8,288.FICA tax for Social Security is 6.2% and the FICA tax for Medicare is 1.45%.The FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both unemployment taxes are applied to the first $7,000 of an employee's pay.The amount of Federal Income Tax withheld from his earnings was $1,375.17.What is the amount of the employer's payroll taxes expenses for this employee?

A)$2,009.21
B)$1,131.31
C)$2,506.48
D)$420.00
E)$1,054.04

Question 44

Which of the following is not true regarding the unemployment insurance program?

A)It requires withholding from the employee wages.
B)It is administered by each state.
C)It provides unemployment benefits to qualified workers.
D)It adjusts rates paid by employers based on their merit rating.
E)It is a joint federal and state program.

Question 45

Trey Morgan is an employee who is paid monthly.For the month of January of the current year,he earned a total of $4,538.The FICA tax for social security is 6.2% and the FICA tax rate for Medicare is 1.45% for both the employee and the employer.The amount of federal income tax withheld from his earnings was $680.70.His net pay for the month is:

A)$3,510.14
B)$3,857.30
C)$4,190.84
D)$4,538.00
E)$3,162.98

Question 46

An employee earned $62,500 during the year working for an employer.The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%.The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both unemployment taxes are applied to the first $7,000 of an employee's pay.What is the amount of total unemployment taxes the employee must pay?

A)$101.50
B)$56.00
C)$378.00
D)$434.00
E)$0.00

Question 47

The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both taxes are applied to the first $7,000 of an employee's pay.Assume that an employee earned total wages of $2,900 in the current period and had cumulative pay for prior periods of $5,800.What is the amount of unemployment taxes the employer must pay on this employee's wages for the current period?

A)$420.00.
B)$348.00.
C)$72.00.
D)$174.00.
E)$0.00.

Question 48

Employer payroll taxes:

A)Are added expenses beyond that for the wages and salaries earned by employees.
B)Represent the federal taxes withheld from employees.
C)Represent the social security taxes withheld from employees.
D)Are paid by the employee.
E)Are payable for up to a maximum $117,000 of employee earnings.

Question 49

An employee earned $43,300 working for an employer in the current year.The current rate for FICA Social Security is 6.2% payable on earnings up to $117,000 maximum per year and the rate for FICA Medicare 1.45%.The employer's total FICA payroll tax for this employee is:

A)$8,950.50.
B)$5,638.05.
C)$3,312.45.
D)$2,684.60.
E)$0,since the FICA tax is only deducted from an employee's pay.

Question 50

Portia Grant is an employee who is paid monthly.For the month of January of the current year,she earned a total of $8,260.The FICA tax for social security is 6.2% and the FICA tax rate for Medicare is 1.45%.The FUTA tax rate of .6% and the SUTA tax rate of 5.4% are applied to the first $7,000 of an employee's pay.The amount of federal income tax withheld from her earnings was $1,325.17.Her net pay for the month is:

A)$6,422.71
B)$6,246.94
C)$6,302.94
D)$5,868.94
E)$6,422.71

Question 51

The annual Federal Unemployment Tax Return is:

A)Form 940.
B)Form 1099.
C)Form 104.
D)Form W-2.
E)Form W-4.

Question 52

The rate that a state assigns reflecting a company's stability or instability in employing workers is the:

A)FICA rate.
B)Tax withholding rate.
C)Pay rate.
D)Credit rating.
E)Merit rating.

Question 53

FUTA taxes are:

A)Social Security taxes.
B)Medicare taxes.
C)Employee income taxes.
D)Unemployment taxes.
E)Employee deductions.

Question 54

The Wage and Tax Statement given to each employee annually is:

A)Form 940.
B)Form 941.
C)Form 1040
D)Form W-2.
E)Form W-4.

Question 55

A bank that is authorized to accept deposits of amounts payable to the federal government is a:

A)Credit union.
B)FDIC insured bank.
C)Federal depository bank.
D)National bank.
E)Federal Reserve Bank.

Question 56

An employee earned $128,500 working for an employer in the current year.The current rate for FICA Social Security is 6.2% payable on earnings up to $117,000 maximum per year and the rate for FICA Medicare 1.45%.The employer's total FICA payroll tax for this employee is:

A)$9,117.25.
B)$9,830.25.
C)$879.75.
D)$8,950.50.
E)$0,since the FICA tax is only deducted from an employee's pay.

Question 57

The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both taxes are applied to the first $7,000 of an employee's pay.Assume that an employee earned total wages of $9,900.What is the amount of total unemployment taxes the employer must pay on this employee's wages?

A)$336.00.
B)$420.00.
C)$534.60.
D)$594.00.
E)$0.00.

Question 58

All of the following are employer payroll taxes except:

A)Social Security tax equal to that withheld from employees.
B)Medicare tax equal to that withheld from employees.
C)State unemployment tax.
D)Federal unemployment tax.
E)Federal income tax equal to that withheld from employees.

Question 59

Portia Grant is an employee who is paid monthly.For the month of January of the current year,she earned a total of $8,260.The FICA tax for social security is 6.2% and the FICA tax rate for Medicare is 1.45%.The FUTA tax rate of 0.6% and the SUTA tax rate of 5.4% are applied to the first $7,000 of an employee's pay.The amount of federal income tax withheld from her earnings was $1,325.17.What is the total amount of taxes withheld from the Portia's earnings?

A)$3,097.17
B)$2,443.21
C)$1,957.06
D)$1,722.00
E)$1,495.36

Question 60

Triston Vale is paid on a monthly basis.For the month of January of the current year,he earned a total of $5,210.FICA tax for Social Security is 6.2% and the FICA tax for Medicare is 1.45%.The FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both unemployment taxes are applied to the first $7,000 of an employee's pay.The amount of Federal Income Tax withheld from his earnings was $885.70.What is the amount of the employer's payroll taxes expenses for this employee?

A)$1,284.27
B)$312.60
C)$398.57
D)$711.17
E)$1,596.87

Question 61

On April 12,Hong Company agrees to accept a 60-day,10%,$4,500 note from Indigo Company to extend the due date on an overdue account.What is the journal entry needed to record the transaction by Indigo Company?

A)Debit Notes Payable $4,500;credit Accounts Payable $4,500.
B)Debit Accounts Payable $4,500;credit Notes Payable $4,500.
C)Debit Accounts Receivable $4,500;credit Notes Payable $4,500.
D)Debit Cash $4,500;credit Notes Payable $4,500.
E)Debit Sales $4,500;credit Notes Payable $4,500.

Question 62

Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $32,500 to be paid during January of the following year.The journal entry on December 31 to record the bonuses is:

A)Debit Estimated Bonus Payable $32,500;credit Cash $32,500.
B)Debit Employee Bonus Expense $32,500;credit Bonus Payable $32,500.
C)No entry since the bonuses are not paid until January.
D)Debit Employee Bonus Expense $32,500;credit Prepaid Employee Bonus $32,500.
E)Debit Unearned Bonuses $32,500;credit Bonus Payable $32,500.

Question 63

A company sold $12,000 worth of bicycles with an extended warranty.It estimates that 2% of these sales will result in warranty work.The company should:

A)Consider the warranty expense a remote liability since the rate is only 2%.
B)Recognize warranty expense at the time the warranty work is performed.
C)Recognize warranty expense and liability in the year of the sale.
D)Consider the warranty expense a contingent liability.
E)Recognize warranty liability when the company purchases the bicycles.

Question 64

If a company uses a special payroll bank account:

A)The company does not need to issue paychecks.
B)The company draws one check for the entire payroll on the regular bank account and deposits it in the payroll bank account.
C)The company must use a federal depository bank for the payroll bank account.
D)There is no need for a payroll register.
E)There is no need to issue W-2's.

Question 65

The wage bracket withholding table is used to:

A)Compute social security withholding.
B)Compute Medicare withholding.
C)Compute federal income tax withholding.
D)Prepare the W-4.
E)Compute unemployment taxes.

Question 66

A payroll register does not include:

A)Pay period dates.
B)Hours worked.
C)Gross pay and net pay.
D)Deductions.
E)Employer tax expenses.

Question 67

An estimated liability:

A)Is an unknown liability of a certain amount.
B)Is a known obligation of an uncertain amount that can be reasonably estimated.
C)Is a liability that may occur if a future event occurs.
D)Can be the result of a lawsuit.
E)Is not recorded until the amount is known for certain.

Question 68

A company estimates that warranty expense will be 4% of sales.The company's sales for the current period are $185,000.The current period's entry to record the warranty expense is:

A)Debit Warranty Expense $7,400;credit Sales $7,400.
B)Debit Warranty Expense $7,400;credit Estimated Warranty Liability $7,400.
C)Debit Estimated Warranty Liability $7,400;credit Warranty Expense $7,400
D)Debit Estimated Warranty Liability $7,400;credit Cash $7,400.
E)No entry is recorded until the items are returned for warranty repairs.

Question 69

Employees earn vacation pay at the rate of one day per month.During the month of July,25 employees qualify for one vacation day each.Their average daily wage is $100 per day.What is the amount of vacation benefit expense to be recorded for the month of July?

A)$25
B)$100
C)$250
D)$2,500
E)$25,000

Question 70

Employees earn vacation pay at the rate of one day per month.During the month of June,10 employees qualify for one vacation day each.Their average daily wage is $150 per day.Which of the following is the necessary adjusting journal entry to record the June vacation benefits?

A)Debit Vacation Benefits Expense $1,500;credit Prepaid Vacation Benefits $1,500.
B)Debit Vacation Benefits Expense $1,500;credit Vacation Benefits Payable $1,500.
C)Debit Payroll Tax Expense $1,500;credit Payroll Taxes Payable $1,500.
D)Debit Prepaid Vacation Benefits $1,500;credit Vacation Benefits Payable $1,500.
E)Debit Vacation Benefits Payable;credit Vacation Benefits Expense $1,500.

Question 71

Cantrell Company is required by law to collect and remit sales taxes to the state.If Cantrell has $8,000 of cash sales that are subject to an 8% sales tax,what is the journal entry to record the cash sales?

A)Debit Cash $8,000;credit Sales $7,360;credit Sales Taxes Payable $640.
B)Debit Sales Taxes Payable $640;debit Cash $7,360;credit Sales $8,000.
C)Debit Cash $8,000;credit Sales $8,000;and record the taxes when paid.
D)Debit Cash $8,640;credit Sales $8,000;credit Sales Taxes Payable $640.
E)Debit Accounts Receivable $8,640;credit Sales $8,000;credit Sales Taxes Payable $640.

Question 72

The deferred income tax liability:

A)Results from the income tax expense reported on the income statement differing from the amount of income taxes payable to the government.
B)Is a contingent liability.
C)Can result in a deferred income tax asset.
D)Is never recorded.
E)Is recorded whether or not the difference between taxable income and financial accounting income is permanent or temporary.

Question 73

Companies may use a special bank account solely for the purpose of paying employees,by depositing an amount equal to the total employees' net pay into the account each pay period and drawing the employees' payroll checks on the account.This account is a(n):

A)Federal depository bank account.
B)Employee's Individual Earnings account.
C)Employees' bank account.
D)Payroll register account.
E)Payroll bank account.

Question 74

Employee vacation benefits:

A)Are estimated liabilities.
B)Are contingent liabilities.
C)Are recorded as an expense when the employee takes a vacation.
D)Are recorded as an expense when the employee retires.
E)Increase net income.

Question 75

Furniture World is required by law to collect and remit sales taxes to the state.If Furniture World has $78,000 of cash sales that are subject to a 6% sales tax,what is the journal entry to record the cash sales?

A)Debit Cash $82,680;credit Sales $78,000;credit Sales Taxes Payable $4,680.
B)Debit Sales Taxes Payable $4,680;debit Cash $73,220;credit Sales $78,000.
C)Debit Cash $78,000;credit Sales $78,000;and record the taxes when paid.
D)Debit Cash $78,000;credit Sales $73,320;credit Sales Taxes Payable $4,680.
E)Debit Accounts Receivable $82,680;credit Sales $78,000;credit Sales Taxes Payable $4,680.

Question 76

Estimated liabilities commonly arise from all of the following except:

A)Warranties.
B)Vacation benefits.
C)Income taxes.
D)Employee benefits.
E)Unearned revenues.

Question 77

All of the following statements regarding long-term liabilities are true except?

A)Liabilities not expected to be paid within the longer of one year or the company's operating cycle are reported as long-term liabilities.
B)Long-term liabilities include long-term notes payable,warranty liabilities,lease liabilities,and bonds payable.
C)Liabilities that do not have a fixed due date,but are payable on demand,are reported as long-term liabilities.
D)Long-term liabilities can be reported on the balance sheet in a single total or in multiple categories.
E)A single long-term liability can be divided between current and noncurrent sections on the balance sheet.

Question 78

A company has a selling price of $1,800 each for its printers.Each printer has a 2 year warranty that covers replacement of defective parts.It is estimated that 2% of all printers sold will be returned under the warranty at an average cost of $150 each.During November,the company sold 30,000 printers,and 400 printers were serviced under the warranty at a total cost of $55,000.The balance in the Estimated Warranty Liability account at November 1 was $29,000.What is the company's warranty expense for the month of November?

A)$26,000
B)$45,000
C)$55,000
D)$60,000
E)$90,000

Question 79

A company sold $12,000 worth of bicycles with an extended warranty.It estimates that 2% of these sales will result in warranty work.The current period's entry to record the warranty expense is:

A)Debit Warranty Expense $240;credit Cash $240.
B)Debit Prepaid Warranties $240;credit Warranty Expense $240.
C)Debit Estimated Warranty Liability $240;credit Cash $240.
D)Debit Sales Allowances $240;credit Estimated Warranty Liability $240.
E)Debit Warranty Expense $240;credit Estimated Warranty Liability $240.

Question 80

A table that shows the amount of federal income tax to be withheld from an employee's pay is the:

A)Form 941.
B)Tax table.
C)Wage bracket withholding table.
D)W-2.
E)W-4.