12(a) prequiz study Flashcards
On August 31, 2024, Cullumber University sold $416,000 in season tickets for the school’s 5 game home football season. As each game is played, how much revenue will Cullumber recognize?
$83,200
Federal income taxes withheld by the employer on behalf of the employee are recorded as
current liabilities
Company A rents an office space to Company B. If Company B pays Company A for one year’s rent in advance on June 1:
Company A will record _________ and Company B will record_______.
Unearned Rent Revenue; Prepaid Rent
The three payroll taxes employers pay are
SUTA, FUTA, and FICA
Deferred expenses are not reported as _____ like returnable deposits
current liabilities
What is not required to accrue compensatory balances?
The obligation vests or accumulates, they need to be with the company for 2 years, the employee’s services are rendered, payment is probable
they need to be with the company for 2 years
Nantahala Company signed a one-year, zero-interest note for $75,000 with First Federal Bank on June 1, 20x1. The proceeds of the loan were $69,000. At its December 31, 20x1year-end, Nantahala’s adjusting entry would include
(debit)
a debit to Interest Expense for $3,500
The amount of cash received by the borrower is the ________ of the face amount of the note
present value
Elk Knob Corporation borrowed $50,000 from Sun Coast Savings & Loan on October 1, 20X1. The note has a 7% interest rate and is due in 6 months. What journal entry will Elk Knob make on the March, 20X2 maturity date to record payment of the note?
Debit Interest Payable, $875; Debit Interest Expense, $875; Debit Notes Payable $50,000, Credit Cash, $51,750
Sales taxes payable are reported as ____________ on the retailer’s balance sheet.
current liabilties
The High Country Group’s payroll for the pay period ended January 30, 20X1 is as follows:
Department // Total Payroll // Fed. Inc. Withheld
Sales // $45,000 // $9,000
Admin // 32,000 // 6,000
The High Country Group is incorporated and operates in a state that does not levy state income taxes. The FICA rate for employers and employees is 8%. The federal unemployment tax rate is 3%. The state unemployment tax is also 3%, but the company’s history of stable employment qualifies it for a reduction to 1%.
What should the company record as payroll taxes expense for January 20X1?
$9,240
Cane Mill River Company allows each of its 100 employees 20 days of paid time off (PTO) each year. PTO can be taken starting January 1 of the next year and accumulates. The employees work 8-hour days. The average wage rates in 20X1 and 20X2 were $26 and $27 per hour, respectively. In 20X2, employees took an average of 15 days of PTO each. The December 31 liability is accrued at the wage rate for that year. Assuming all employees were employed continuously, what liability would be reported on the 20X1 and 20X2 balance sheets for PTO?
The 20X1 liability is $416,000; and the 20X2 liability is $540,000
Vested rights are not reliant on employee’s future service and must be…
accrued
To accrue a liability for compensation for future absences, the obligation must relate to the rights that…
vest or accumulate
Crane Company issued a 90-day, zero-interest-bearing note with a face amount of $6150 on November 1. The present value of the note is $5640. About the note, the adjusting journal entry at December 31 will require
(debit)
a debit to Interest Expense of $340
In accounting for short-term debt expected to be refinanced to long-term debt, GAAP uses the financial statement issuance date to determine whether the debt should be classified as short-term or long-term.
T/F?
False
GAAP uses the balance sheet date to determine the classification
What is not a current liability at December 31, 2026? Utlities payable, Bonds Payable due 12/28, Dividends payable, Salaries and Wages Payable
Bonds Payable due 12/28
Current liabilities are defined as obligations whose liquidation is reasonably expected to
require the use of current assets or the creation of other current liabilities
Sunland Company issued a 120-day zero-interest-bearing note with a face amount of $3476. The present value of the note is $2870. The journal entry to record the issuance of the note will include:
(debit)
a debit to Cash for $2870
State and federal unemployment taxes are imposed on both employers and employees.
T/F?
False
The entry to record the collection of sales tax by a retailer may include credits to both Sales Revenue and Sales Tax Payable.
T/F?
true
A company could choose to credit it all to sales revenue, or credit it to sales revenue and sales tax payable
Compensated balances are usually reported as
current liability
Federal income taxes withheld by the employer on the behalf of the employee are recorded as
current liabilities
Discount should be reported as _____________ on the balance sheet
a deduction from the note payable
