Account Classification
What type of account is cash?
Current Asset
A company receives cash for a service not yet performed. Which account is credited?
Unearned revenue
What is gross pay?
Total compensation
What are FUTA and SUTA taxes for?
Federal unemployment and state unemployment taxes
True or False: the amount of an estimated liability doesn't need to be reasonably estimated
False
What type of account is owner draws?
Equity
A company makes a sale with $300 of sales tax. Do you debit or credit this amount?
Credit (sales tax payable)
What is net pay?
The take-home amount
What are the four employer payroll taxes?
FICA SS, FICA Medicare, FUTA, SUTA
What is an example of an estimated liability?
Bonuses, vacation pay, warranties, health care
True or False: Liabilities and Assets are further classified as current and long term
Correct
When the company pays the $300 sales tax to the government, do you debit or credit the payable?
Debit
An employee has earned $4,000 in the current payroll. How much is their FICA Medicare tax?
$58 (1.45%)
An employee earned $3,000 in the current payroll. What is the FICA Medicare tax?
$43.50 (1.45%)
A company sells products with a warranty. They estimate warranty expenses of 5% of the selling price ($5,000). How much is the estimated warranty?
$250
What type of account is a bill payable due in 11 months?
Current liability
A company purchases supplies on credit for $450. What is the journal entry for this transaction?
Debit Supplies $450, Credit A/P $450
An employee has previously earned $135,000. In the current payroll, they earned $3,000. How much of this is subject to FICA SS tax?
$2,700 (137,700 - 135,000)
An employee previously earned $5,500. In the current payroll, they earned $4,000. How much of this is subject to FUTA/SUTA tax?
$1,500 (7,000-5,500)
When a company records the estimated warranty, what account do you credit?
Estimated Warranty Liability
A company has a mortgage with a $200,000. $2,000 is due yearly for 10 years. What amount of the loan is current and what amount is long term?
$2,000 current, $198,000 long term
A company previously received $1,000 for 4 quarterly services. What is the journal entry made after the first service?
Debit Unearned Revenue $250, Credit Revenue $250
How do you calculate an employee's tax home pay?
Gross wages - Medicare - SS - Income Tax W/H - voluntary deductions
How do you calculate total payroll expense?
Gross wages + SS + Medicare + FUTA + SUTA + any other employer payroll expense
True or False: You only record a contingency when the future event is possible and the amount is reasonably estimated.
False (Only probable and reasonably estimated)