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ACCT Assignments Chapter 8

ACCT Assignments Chapter 8 - Nciptfrc Chapter Assignments...

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'4.11,11,613 N ciptfrc Chapter Assignments 421 CHAPTER ASSIGNMENTS Short Exercises 101 Issues in Accounting for Liabilities SE 1. Indicate whether each of the following actions relates to (a) managing liquidity and cash flow, (b) recognition of liabilities, (c) valuation of liabilities, (d) classification of liabilities, or (e) disclosure of liabilities: 1. Determining that a liability will be paid in less than one year 2. Estimating the amount of a liability 3. Providing information about when liabilities are due and their interest rates 4. Determining when a liability arises 5. Assessing working capital and payables turnover 101 Measuring Short-Term Liquidity SE 2. Robinson Company has current assets of $65,000 and current liabilities of $40,000, of which accounts payable are $35,000. Robinson's cost of goods sold is $230,000, its merchandise inventory increased by $10,000, and accounts pay- able were $25,000 the prior year. Calculate Robinson's working capital, payables turnover, and days' payable. 102 LO3 Types of Liabilities SE 3. Indicate whether each of the following is (a) a definitely determinable liabil- ity, (b) an estimated liability, (c) a commitment, or (d) a contingent liability: 1. Dividends payable 2. Pending litigation 3. Income taxes payable 4. Current portion of long-term debt 5. Vacation pay liability 6. Guaranteed loans of another company 7. Purchase agreement LO2 Interest Expense on Note Payable SE 4. On the last day of August, Avenue Company borrowed $240,000 on a bank note for 60 days at 12 percent interest. Assume that interest is stated separately. Prepare the following entries in journal form: (1) August 31, recording of note; and (2) October 30, payment of note plus interest. LO2 Payroll Expenses SE 5. The following payroll totals for the month of April are from the payroll register of Young Corporation: salaries, $223,000; federal income taxes withheld, $31,440; social security tax withheld, $13,826; Medicare tax withheld, $3,234; medical insurance deductions, $6,580; and salaries subject to unemployment taxes, $156,600. Determine the total and components of (I ) the monthly payroll and (2) employer's payroll expense, assuming social security and Medicare taxes equal to the amounts for employees, a federal unemployment insurance tax of 0.8 percent, a state unemployment tax of 5.4 percent, and medical insurance pre- miums for which the employer pays 80 percent of the cost.
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422 CHAPTER 8 Current Liabilities and Fair Value Accounting L02 Product Warranty Liability SE 6. Harper Corp. manufactures and sells travel clocks. Each clock costs $12.50 to produce and sells for $25. In addition, each clock carries a warranty that pro- vides for free replacement if it fails during the two years following the sale. In the past, 5 percent of the clocks sold have had to be replaced under the warranty. During October, Harper sold 52,000 clocks, and 2,800 clocks were replaced
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