会原19版练习答案 Chapter_11_SM.docVIP

Chapter 11 Current Liabilities and Payroll Accounting QUESTIONS 1. The three questions are: (1) Who must be paid? (2) When is payment due? (3) How much is to be paid? 2. A current liability is expected to be paid within one year or the company’s operating cycle, whichever is longer. Any liability that is not current is considered to be long term. 3. An estimated liability is an obligation to make a future payment, the exact amount of which is uncertain, but it is capable of being reasonably estimated. 4. The amount of the sale for the item only is $950 ($988/1.04). 5. The combined Social Security tax rate (assuming the maximum wage amount is not yet reached) is 12.4% (6.2% + 6.2%). The maximum level of earnings [wage base on which taxes are due] for 2008 is $102,000. 6. The Medicare tax rate is 1.45%. This rate is applied to all wages earned by an employee—no maximum limit exists. 7. An employee’s gross earnings along with the number of withholding allowances that an employee claims, as well as whether they are married or single, determine the amount deducted for federal income taxes. 8. The employee is responsible for federal income taxes, state income taxes, local income taxes (if any), and the employee portion of the FICA taxes. The employer is responsible for both federal and state unemployment taxes and the employer portion of the FICA taxes. 9. An unemployment merit rating is based on an evaluation of an employer’s experience in creating or avoiding unemployment with its employees. The merit rating affects the state unemployment taxes that the employer must pay. Merit ratings cause more of the cost of unemployment benefits to be paid by those who create more unemployment. 10. The obligation to correct or replace defective products (or services) is created when the products are sold with the warranties. Even though the seller does not know with certainty when the obligation will be paid, to whom it will be paid, or the amount to be p