chapter 9 sb

• When a company has a current obligation to make a future payment to their supplier due to a shipment of supplies that were received last week, the company would record this transaction with an increase to an asset account and a(n) Blank______ account. liability
• A known liability is a measurable obligation arising from agreements, contracts, or laws. Known liabilities would include all of the following items, except: warranties.
• A liability created by buying goods or services on credit is typically recorded to accounts payable
• Bryne Co. sells merchandise and collects a 5% state sales tax. The tax is recorded on Bryne's general ledger as a(n) Blank______ account.

  liability
• Bina Consulting Co. collected $500 from a customer in advance to provide consulting fees for the next two months. The $500 would be recorded with a debit to Cash and a credit to the Unearned Revenues, which is a liability

   account.
• liability is a probable future payment of assets or services that a company is presently obligated to make as a result of past transactions or events.
• Cadie Construction Co. signed a note promising to pay a cement supplier $1,000 60-days from now. As a result of this transaction, Cadie would record a(n) Blank______ on her balance sheet.short-term note payable
• A measurable obligation arising from agreements, contracts, or laws is called a known liability.
• Niwa Co. replaced a $3,000 account payable balance to Fiona Co. with a 60-day, $3,000 note bearing 5% annual interest. Which of the following entries would Niwa's entry to record this transaction include?

  • Debit to Accounts Payable
  • Credit to Notes Payable
• Accounts payable are amounts owed to suppliers for products or services purchased on credit.
• On March 1, Young Co. borrowed $1,000 by extending their past-due account payable with a 120-day, 6% interest-bearing note. On June 29, the due date, Young pays the amount due in full. This entry would be recorded by Young with a credit to __ in the amount of __. Cash; $1,020

  Reason: 

  Interest is computed for 120 days. $1,000 x .06 x (120/360) = $20. Cash will be credited for $1,000 + 20.
• Zion Co. sells $100 of merchandise and collects $10 sales tax. The sales tax is recorded to which account?Sales tax payable
• Winn Co. signs a 60 day note payable for a $15,000 copy machine with an interest rate of 8%. Winn will record total interest expense of $200 Reason: 

  $15,000 x .08 x (60/360) = $200.
• Amounts received in advance from customers for future products or services are typically recorded in a liability account called Blank______.Unearned Revenues
• ___Gross pay___ is(are) the total compensation an employee earns including wages, salaries, commissions, bonuses, and any compensation earned before deductions such as taxes.
• A written promise to pay a specified amount on a stated future date within one year or the company's operating cycle, whichever is longer, is considered a Blank______.short-term note payable
• Jorge Lopez worked 40 hours this week and earned $1,000. Federal and state taxes, and other withholdings totaled $350. Jorge's net pay totals $650
• Bushra Co. replaced a $1,000 account payable balance to Elin Co. with a 120-day, $1,000 note bearing 8% annual interest. Bushra's entry to record this transaction would include a credit to which account? Notes Payable

  This is an accounts payable, which is being replaced with a note payable, so Notes Payable is credited to increase it.
• On January 1, Avers Co. borrowed $10,000 by extending their past-due account payable with a 60-day, 8% interest-bearing note. On March 1, the due date, Avers pays the amount owing in full. Avers would record this entry with a debit to (Accounts Payable/Notes Payable/Cash) __ in the amount of __. Notes Payable; $10,000Reason: 

  Notes Payable will be debited for $10,000. Cash will be credited for $10,133.
• Sheldon has a $15,000 liability for a machine that has an interest rate of 10%. The interest expense for one year is?$1,500
• Jorge Lopez worked 40 hours this week and earned $1,000 in total compensation. Federal and state taxes and other withholdings totaled $350. Jorge's gross pay totals $1,000
• Gross pay minus all deductions—including federal and state taxes, FICA and any voluntary deductions equals net pay. ​
• Employee income tax depends on: number of employee withholding allowances

  employee's income
• On June 1, Sawyer Co. borrowed $5,000 by extending their past-due account payable with a 45-day, 12% interest-bearing note. On July 16, the due date, Sawyer pays the amount due in full. Sawyer would record this payment with a (debit/credit) Blank______ to Interest Expense in the amount of Blank______. debit; $75 Interest Expense is debited for $75 computed as $5,000x.12x(45/360).
• Employers must pay employee taxes in addition to those paid by the employees. Which of the following is paid only by the employer? Unemployment
• ______ is(are) the total compensation an employee earns including wages, salaries, commissions, bonuses, and any compensation earned before deductions such as taxes. Gross pay
• Which of the following liabilities could be a multi-period known liability?

  • Unearned Subscription Revenues
  • Notes Payable
• Amounts withheld from employee's earnings for employee income tax is considered a ___current liability___ by the employer until the government is paid.
• A(n) Blank___estimated___ liability is a known obligation that is of an uncertain amount but that can be reasonably estimated.
• Unemployment taxes are examples of employer taxes.
• Unearned subscription revenues that extends over multiple periods is an example of a Blank______ known liability.multi-period

  Reason: 

  This is a multi-period liability because the unearned subscription revenue will extend over multiple periods.
• Which of the following items are considered employee benefits?

  Medical insurance

  Pension plans
• A known obligation of an uncertain amount that can be reasonably estimated is called an estimated liability
• Paid absences offered to employees are called vacation benfits
• Employers must pay employee taxes in addition to those paid by the employees. Which of the following is paid only by the employer?Unemployment
• A ______ is when an employer provides employees with a percentage of the company's net income earned during the year. bonus plan
• Employee Blank______ are perks that are provided in addition to salaries and wages, such as all or part of medical, dental, life and disability insurance.

  benefits
• Simar Sales Co. sells and installs kitchen appliances. Simar guarantees parts and labor for one year after installation. Simar would record potential claims in a(n) Blank______ account.Estimated Warranty Liability
• Abby Co. allows each employee two weeks of paid time off during each calendar year. Since employees are working for 50 weeks, rather than 52 weeks, Abby must accrue the paid time off during the 50 weeks that the employees work. The year-end adjusting entry is recorded as a credit to the Blank______ account. Vacation Benefits Payable
• Which of the following situations would require a journal entry to record the contingent liability in the financial statements?The liability is probable and estimated to be $10,000.