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Exam 8: Liabilities and Stockholders Equity

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Question 21

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An employee receives an hourly rate of $30, with time and a half for all hours worked in excess of 40 during a week.Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $300; cumulative earnings for year prior to current week, $90,700; social security tax rate, 6.0% on maximum of $106,800; and Medicare tax rate, 1.5% on all earnings.What is the net pay for the employee?

A) $1,147.95
B) $1,059.75
C) $1,470.00
D) $1,359.75

E) A) and B)
F) B) and D)

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Question 22

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The reduction in the par or stated value of common stock, accompanied by the issuance of a proportionate number of additional shares, is called a stock split.

A) True
B) False

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Question 23

Multiple Choice

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On March 15, Silver Co.issued a $80,000, 5%, 90-day note payable to Gold Co.How much will Silver Co.have to pay at maturity? (Assume 360 days in a year)

If the market rate of interest is 7% and a corporation's bonds bear interest at 8%, the bonds will sell at a premium.

_____ liabilities may arise from past transactions if certain events occur in the future.

As interest is recorded on an interest-bearing note, the Interest Expense account is:

Which of the following is necessary for a corporation to pay cash dividends?

On November 21 of the current year, Maroon Inc.reacquired 50,000 shares of its common stock at $4 per share.As a result of this transaction, net assets of the company:

A bond is simply a form of an interest-bearing note.

Where is interest expense listed on the income statement?

One of the conditions for paying a cash dividend is sufficient retained earnings.

Obligations that depend on future events and are based on past transactions are contingent liabilities.

Federal unemployment compensation taxes that are collected by the federal government are not paid directly to the unemployed but are allocated among the states for use in state programs.

During the first year of operations, employees earned vacation pay of $50,000.The vacations will be taken during the second year.The vacation pay expense should be recorded in the first year of operations.

Treasury stock is a contra-equity account.

Which of the following will be classified as a current liability?

The _____ is determined by transactions between buyers and sellers of similar bonds.

Bonds payable due in 2020 are reported on the balance sheet as long-term liabilities.

For accounting purposes, stated value is treated the same way as par value.

If 50,000 shares are authorized, 35,000 shares are issued, and 1,000 shares are reacquired, the number of outstanding shares is 36,000.