LO1
Determine if the following accounts are long-term or current liabilities:
Income tax payable, Bonds Payable, Interest Payable, Utilities Payable
Income Tax Payable - Current
Bonds Payable - Long-term
Interest Payable - Current
Utilities Payable - Current
How many centimeters are in an inch?
2.54
What is the equation to estimate bonus?
Bonus = (Bonus % x Net income before bonus) / (1 + bonus)
What Accounting Principle do Contingent Liabilities have to follow?
Full disclosure principle
Calculate the Time-interest-earned ratio for 2025 given the following information:
Net income: $51,150
Income tax expense: $25,300
Interest expense: $5,500
14.9
What principle in accounting does Notes payable follow when accruing interest expense at the end of a year?
Matching Principle
An employee has year-to-date earnings of $146,000. The employees gross pay for the next period is $3,800. If the FICA-OASDI is 6.2% and the wage base is $147,000, how much FCA-OASDI tax will be withheld from the employee's pay? (Round to the nearest whole dollar)
$62
Subway has 38 employees. Each employee gets 4 vacation days a month. Subway pays each employee a weekly salary of $910 for a seven-day work week. Journalize the entry to accrue the vacation expense for the month.
Debit - Vacation benefits expense: $19760
Credi - Vacation benefits payable: $19760
Who is the author of the children's book "The Very Hungry Caterpilliar"?
Eric Carle
What is the Time-interest-earned ration formula?
(Net income + Income tax expense + Interest expense) / Interest expense
What is Bruno Mars's real ame?
Peter Gene Hernandez
Lindsay gets paid $35/hour and time-and-a-half if she works over 40 hours. What is Lindsay's gross pay if she works 46 hours.
Straight-time (40 hours): $1,400
Overtime (6 hours): $315
Gross pay: $1,715
Walmart estimates that they will pay a 5% bonus on annua net income after deducting the bonus. The company reports net income of $120,023 before the calculation of the bonus. Make a journal entry to record employee bonus expense.
Debit - Employee bonus expense: $5715
Credit - Employee bonus payable: $5715
What are the 3 categories of Contingent Liabilities? Include one characteristic of each.
Remote - Very little chance, no liability recorded, no disclosure notes necessary
Reasonable possible - 50/50 no liability recorded, disclosures note necessary
probable - likely to occur, liabilities and expenses recorded (if the liability can be reasonably estimated), disclosure note necessary
What does the times-interest-earned ratio formula tell us? Is a higher or lower number more desireable?
1. Ability pay interest expense
2. A higher number is more desirable because it shows we can easily pay off interest expense
On July 5th, Washington company recorded sales of merch. inventory on account, $20,000. The sales were subject to sales tax of 6%. On August 15th, Washington Company paid the sales tax owed to the state from the transaction on July 5th.
1. Journalize the transaction to record the sale from July 5th.
2. Journalize the transaction to record the payment of sales tax to the state on August 15th.
1. Debit - Accounts receivable: $21,000
Credit - Sales Revenue: $20,000, Sales tax payable: $1,200
2. Debit - Sales tax payable: $1,200
Credit - Cash: $1,200
Silver Spoons, a retail store employs Danielle Hoop who worked 56 hours the past week. Her straight-time wage is $40/hour, with time-and-a-half above 40 hours. Silver Spoons withholds income tax, OASDI and Medicare from Hoopers pay.
Record and journalize the accrual of salaries and wages expense and subsequent payment related to Hooper.
Debit - Salaries and wages expense: $2,560
Credit - Employee income taxes payable: $384, OASDI: $159, Medicare: $37, Salaries and wages payable: $1980
Nike made sales totaling $550,000 in 2025. The company received cash for 30% of the sales and the rest on account. The estimated warranty expense is 2% of sales. At the end of the year warranty payments totaled $6,000. Make a journal entry for the sale, warranty expense as well as the warranty payment.
1. Sale
Debit - Cash: $165,000, Accounts Receivable: $385,000
Credit - Sales revenue: $550,000
2. Warranty expense
Debit - Warranty expense: $11,000
Credit - Estimated warranty payable: $11,000
3. Warranty Payment
Debit - Estimated warranty payable: $6,000
Credit - Cash: $6,000
Determine the appropriate accounting treatment for each scenario:
1. Surgery, Inc. is being sued by a customer. Surgery, Inc. believes that there is a remote chance that the customers wil win. The customers is suing Surgery, Inc. for damages of $1,908,000.
2. Target received notice that it was being sued. Target considered this lawsuit to be frivolous.
1. Remote - Do not disclose
2. Remote - Do not disclose
What are the first words spoken in Shrek (2001)?
Once upon a time
Complete the following transaction.
1. Sold a 6-month subscription starting November 1st, collecting $540, plus sales tax of 9%.
2. Remitted (paid) the taxes to the state.
3. End of the year adjustment for the amount of subscription revenue earned during the year.
1. Debit - Cash: $589
Credit - Unearned Revenue: $540, Sales tax payable: $49
2. Debit - Sales tax payable: $49
Credit - Cash: $49
3. Debit - Unearned Revenue: $180
Credit - Subscription revenue ($180)
A company has monthly salaries of $32000. Assume this company pays all the standard payroll taxes, no employees have reached the payroll tax limits. Total income tax withhed is $2,400, no other deductions other than payoll taxes. Journalize the accrual of salaries expense, accrual of employer payroll taxes, and the payment of employee and employer payroll taxes for the company.
1. Accrual of salaries expense
Debit - Salaries expense: $32,000
Credit - employee income tax payable: $2,400, OASDI taxes payable: $1,984, Medicare taxes payable: $464, Salaries payable: $27,152
2. Accrual of employer payroll taxes
Debit - Payroll tax expense: $4,368
Credit - OASDI taxes payable: $1,984, Medicare taxes payable: $464, Federal Unemployment taxes payable: $192, State Unemployment taxes payable: $1728
3. Payment of employee and employer payroll taxes
Debit - OASDI taxes payable: $3,969, Medicare taxes payable: $928, Employee income taxes payable: $2,400, Federal Unemployment taxes payable: $292, State Unemployment taxes payable: $1,728
Credit - Cash: $9,216
What is the primary birthstone for March?
Aquamarine
Home Goods is a party to a lawsuit for copyright violation of $30,000. Home Good's attorney advises that it is probable that Home Goods will lose this lawsuit. The attorney estimates the loss at $30,000.
Debit - Estimated Loss from lawsuit: $30,000
Credit - Estimated Lawsuit payable: $30,000
Compare the time-interest-earned ratio for each company. Round to 2 decimals. Then, evaluate each company to find out which one was better able to cover its interest expense.
Cash: Pennington:
Net income: $26,070 $74,188
Income tax expense: $9,270 $27,080
Interest expense: $300 $2,900
Cash: 118.80
Pennington: 35.92
Cash is better able to cover its interest expense.