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Exam 8: Liabilities and Stockholders Equity

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Question 31

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Prior to the last weekly payroll period of the calendar year,the cumulative earnings of employees A and B are $106,150 and $91,000,respectively.Their earnings for the last completed payroll period of the year are $850 each.The amount of earnings subject to social security tax at 6% is $106,800.All earnings are subject to Medicare tax of 1.5%.Assuming that the payroll will be paid on December 29,what will be the employer's total FICA tax for this payroll period on the two salary amounts of $850 each?

A) $127.50
B) $115.50
C) $76.50
D) $63.75

E) A) and C)
F) A) and B)

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Question 32

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

A) decreased;the Interest Payable account is increased.
B) increased;the Interest Payable account is increased.
C) increased;the Notes Payable account is decreased.
D) increased;the Notes Payable account is increased.

E) None of the above
F) All of the above

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Question 33

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The reduction of par or stated value of stock by issuance of a proportionate number of additional shares is termed a

Most employers are required to withhold a portion of the earnings of each employee for FICA tax.

If $1,000,000 of 8% bonds are issued at 102,the amount of cash received from the sale is

A current liability is a debt that can reasonably be expected to be paid

Paid-in capital and retained earnings are the two major categories of stockholders' equity for a corporation.

Where is interest expense listed on the income statement?

A company sold 200 shares of common stock with a par vale of $5 at a price of $12 per share.Which section of the statement of cash flows will contain this transaction?

If 50,000 shares are authorized,37,000 shares are issued,and 2,000 shares are reacquired,the number of outstanding shares is 35,000.

Federal unemployment compensation tax is a tax that is paid only by employers.

A corporation,which had 20,000 shares of common stock outstanding,declared a 3-for-1 stock split.

Earnings per common share is one factor that influences the decision to use debt financing or equity financing.

Which of the following would most likely be classified as a current liability?

A corporation purchases 5,000 shares of its own $20 par common stock for $35 per share,recording it at cost.What will be the effect on total stockholders' equity?

If $1,000,000 of 10% bonds are issued at 98 3/4,the amount of cash received from the sale is

When the contract rate of interest on bonds is less than the market rate of interest,the bonds sell at

If prior to the last weekly payroll period of the calendar year,the cumulative earnings for an employee are $75,200,earnings subject to social security tax are $106,800,and the tax rate is 7.5%,the employer's social security tax on the $800 gross earnings paid on the last day of the year is $60.

If bonds are issued at a premium,the stated interest rate is

Treasury stock is a contra-equity account.