Damen's Co. sells merchandise with a list price of $500 and collects sales tax of $50.

The sales
tax would be recorded with a credit to which account? Sales Tax Payable

Lyon Co. collected $1,200 in sales tax from customers during the month of March. In April,
Lyon sent the $1,200 sales tax to the state government. The entry to record payment to the state
would include which of the following? (Check all that apply.) Debit to Sales Tax Payable

Credit to Cash

Mary's Magazine Sales sells popular magazine subscriptions. During January, Mary collected
$1,200 from various customers to provide magazines over the next 12 months. At the end of
February, Mary would make an adjusting entry to record one month of magazines subscriptions
earned. This transaction would include which of the following entries? (Check all that apply.)
Credit to Subscriptions Earned

Debit to Unearned Subscriptions

On November 1, Lance Co. borrows $90,000 cash from First Bank by signing a 90-day, 5%
interest-bearing note. On December 31, Lance will record an adjusting entry by crediting
_______ in the amount of ______. Interest Payable; $750

The computation of interest is $750 from November 1 to December 31 which is 60 days. $90,000
x .05 x (60/360)=$750.

On June 1, Sawyer Co. borrowed $5,000 cash from Crystal Bank by signing a 45-day, 12%
interest-bearing note. On July 16, Sawyer pays the amount due in full. Sawyer would record this
payment with a (debit/credit) _______ to Interest Expense in the amount of _______. debit;
$75

Fortiz Co. receives $85 for the sale of merchandise with a sales price of $80 and sales tax of $5.
The entry to record the $5 sales tax would require which of the following? Credit to Sales Tax
Payable

Stalz Co. collected $2,500 in sales tax from customers during the month of February. In March,
Stallon sends the $2,500 to the state government. The payment to the state would be recorded
with a debit to which account? Sales Tax Payable

A company sells 12-month popular magazine subscriptions. During the month of May, the
company sells $12,000 in magazines, which will start in June. The adjusting entry to record the
$1,000 of subscriptions earned in June will include a debit to which account?
Cash Unearned Subscription Revenue

On December 1, Hansen Co. borrows $100,000 cash from National Bank by signing a 90-day,
6% interest-bearing note. On December 31, Hansen will record an adjusting entry by debiting
interest expense in the amount of ______. $500
You are recording the amount accrued from 12/1 - 12/31: $100,000x.06x(30/360)=$500.

On March 1, Young Co. borrowed $1,000 cash from Superior Bank by signing a 120-day, 6%
interest-bearing note. On June 29, 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

Interest is computed for 120 days. $1,000 x .06 x (120/360) = $20. Cash will be credited for
$1,000 + 20. Notes payable will be debited for $1,000.

KRS Co. sells merchandise for $120 and collects sales tax of $12. KRS would record the $12
sales tax with a credit to the Sales Tax ___________ account. payable

Tire Co. collected $2,000 in sales tax during the month of October. The entry that shows the
remittance of this sales tax to the state government in November would include a credit to the
_______ account. Blank 1: cash

John Grey owns Grey's Snow Plowing. In October, he collects $12,000 cash for 6 commercial
accounts for which he will provide snowplowing for the next three months. John recorded the
cash collection as an unearned revenue. To record the adjusting entry in November, when $4,000
has been earned, Grey will enter which of the following entries? (Check all that apply.) Debit
to Unearned Plowing Revenue

Credit to Plowing Revenue Earned

On January 1, Avers Co. borrowed $10,000 cash from Main St. Bank by signing a 60-day, 8%
interest-bearing note. On March 1, Avers pays the amount due in full. The March 1 entry would
be recorded by Avers with a debit to (Accounts Payable/Notes Payable/Cash)_____ in the
amount of _______. Notes Payable; $10,000

The federal Social Security system provides retirement, disability, survivorship, and medical
benefits to qualified workers. Laws require employers to withhold _____ taxes from employees'
pay to cover costs of the system. FICA

Most employers are required to withhold ________ from an employee's paycheck. The amount
withheld is computed using tables published by the IRS. The amount depends on the employee's
annual earnings rate and the number of withholding allowances the employee claims. federal
income taxes

Leo Calvin is required to have ______ taxes withheld from his pay in order to cover the cost of
future retirement, disability, and survivorship and medical expenses. FICA

Employers often withhold other amounts from employees' earnings which arise from employee
requests, contracts, unions, or other agreements. These withholdings are called employee
__________ and include items such as medical premiums. voluntary deductions
Tire Co. collected $2,000 in sales tax during the month of October. The entry that shows the
remittance of this sales tax to the state government in November would include a credit to the
_______ account. Blank 1: cash

Zilo Co. has accrued employee salary expense of $1,000 which includes employee withholdings
that total $300. On payday, Zilo will record the payment with which of the following entries?
(Check all that apply.)Credit to Cash for $700.

Debit to Salaries Payable for $700.

Rachel Ryder is an employee working at Brand-Mart. Rachel earns $35,000 per year and claims
three withholding allowances. The amount withheld from her paycheck, using this information,
is called federal ______ taxes. income

Examples of employee voluntary deductions may include all of the following except:
unemployment taxes.

FICA tax includes both Social Security tax and _____. Medicare tax

The federal government requires that employers are taxed on employee wages to provide
unemployment benefits to qualified workers. These taxes are known as: FUTA

Anchor Co. has accrued payroll expense of $1,300 which includes employee withholdings of
$400. On payday, Anchor will record the distribution of paychecks with a credit to ______ in the
amount of $________. Blank 1: Cash

Blank 2: 900

The journal entry to record employer tax accruals includes a debit to: Payroll Tax Expense

Which of the following is a true statement concerning the employer FICA taxes: The employer
must pay FICA tax in an amount equal to that paid by the employee.

Federal government taxes implemented on employers in order to provide unemployment benefits

Employer taxes, such as SUTA, are recorded with a debit to Employer Tax Expense and a credit
to SUTA (expense/payable) _________ until payments are submitted to the state. payable

A(n) ______ liability is a known obligation that is of an uncertain amount but that can be
reasonably estimated. estimated

Which of the following items are considered employee benefits? (Check all that apply.)
Medical insurance

Pension plans
A known obligation of an uncertain amount that can be reasonably estimated is called a(n)
_______ liability. estimated

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. This accrual is recorded under the ________
account. Vacation Benefits Payable

Employee ________ are perks that are provided in addition to salaries and wages, such as all or
part of medical, dental, life and disability insurance. benefits

Theo Co. has two full-time employees who are provided health insurance at Theo's expense. At
the end of the period, the cost of the insurance totals $1,400. The entry that Theo will make to
accrue these costs include a debit to the ___________ account. Employee Benefits Expense

Trighton's Trailer Co. sells all kinds of trailers and provides a one-year warranty on all new
trailer sales. Based on history, Trighton anticipates that 2% of trailers will be returned and will
have a warranty cost of $100 per trailer. During the month, Victor sold 300 trailers for a total of
$255,000. At the end of the month, Trighton will record $__________ in warranty expense.
Blank 1: 600

Handy Holly Co. provides a variety of household repairs and warranties her work for a six-
month period. Holly provided $13,000 of service fees during the month and anticipates that
warranty repairs for these sales will total $400. The entry that Holly will make to record the
estimated warranty expense will include a credit which account? Estimated Warranty Liability

Pyott Co. sells small appliances and offers warranties on all new sales. During the month of
December, Pyott's sales were $30,000 and accrued related warranties totaled $300. During
January, a customer made a repair claim under the warranty requiring $200 of labor. The journal
entry related to the January repair would include a debit to the _______ account in the amount of
______. Estimated Warranty Liability; $200

Paid absences that are accrued throughout the year are recorded in the _____________ account.
Vacation Benefit Expense

Employee benefits that are paid by the employer are recorded in the Employee Benefit account.
Blank 1: Expense

Victor's Vacuum Sales Co. sells high quality vacuums and provides a one-year warranty on all
new sales. Based on history, Victor anticipates that 3% of vacuums will be returned at a cost of
$30 per vacuum. During the month, Victor sold 100 vacuums for a total of $35,000. At the end
of the month, Victor will record _______ in Warranty Expense. $90

100 x .03 x $30 = $90

Debit to Warranty Expense

Leeroy's Lawn Mowers offers a one-year warranty on all new mower sales. During 2017, Leeroy
sold $200,000 in mowers and accrued $2,000 of related warranty expense. In January 2018, a
customer brought in a mower covered under warranty that required $500 in labor. The journal
entry to record this repair would include which of the following entries? (Check all that apply.)
Credit to Wages Payable

Debit to Estimated Warranty Liability

*Wages Payable is credited for the labor.

Boyd's Bicycle Sales and Repairs Co. offers a 6-month warranty on all new bicycle purchases.
Based on history, Boyd determines that warranty repairs are equal to approximately 2% of sales.
During the month, Boyd sales total $20,000. Boyd will record Warranty Expense in the amount
of ______ for the month. $400

Which of the following situations would not be required to be recorded in the financial
statements or reported as a note to the financial statements? The liability is remote and estimated
to be $30,000.

Which of the following contingent liabilities would require a company to record a note to the
financial statements? (Check all that apply.) The liability is possible and is estimated to be
$35,000.

The liability is probable and cannot be reasonably estimated.

The liability is possible and cannot be reasonably estimated.

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.

Which of the following represent reasonably possible contingent liabilities? Select all that apply.
potential legal claims

debt guarantees

In order for a contingent liability to be recorded as a journal entry in the financial statements, it
must be (probable/reasonably possible/remote) ____ and reasonably estimable. probable
A contingent liability can be ignored (not recorded in the financial statements or notes to the
financial statements) if it is considered as (probable/reasonably possible/remote)
________possibility. Blank 1: remote