39) Indicate with an “X” whether each description results in the reporting of a current liability, long-term liability, or neither on the company’s balance sheet. Assume a December 31, 2011 yearend.
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Current
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Long-term
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Neither
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1.
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The company has debt obligations due in two years.
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2.
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Amount owed to suppliers for merchandise purchased.
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3.
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Amount accrued for outside legal fees owed. The bill with the exact amount will not be received until 2012.
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4.
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Employees have earned $4,000 in the last 3 days of 2011. They will not be paid until January 2012.
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5.
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On December 31, the company purchased merchandise on account with terms FOB destination; the merchandise is in transit at yearend.
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40) Indicate with an “X” whether each description results in the reporting of a definitely determinable liability, an estimated liability or neither on the company’s balance sheet. Assume a December 31, 2011 yearend.
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Definitely determinable
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Estimated
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Neither
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1.
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The company has debt obligations due in two years.
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2.
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Amount owed to suppliers for merchandise purchased.
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|
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3.
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Amount accrued for outside legal fees owed. The bill with the exact amount will not be received until 2012.
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4.
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Employees have earned $4,000 in the last 3 days of 2011. They will not be paid until January 2012.
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5.
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On December 31, the company purchased merchandise on account with terms FOB destination; the merchandise is in transit at yearend.
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41) The following data comes from the payroll department of LoJack Corporation for the last pay period of 2011. Employees will not be paid until 2012.
Gross employee earnings
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$330,000
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Federal income taxes withheld
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$48,000
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FICA Social Security taxes withheld
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$20,460
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Medicare taxes withheld
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$4,785
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Required:
1. Determine the amount the balance sheet will report as Wages payable.
2. Determine the amount the income statement will report as Wages expense from this pay period.
3. What type of liability is Wages payable?
4. To what party must the company pay the FICA taxes?
5. Why does LoJack have to withhold taxes from its employees?
42) Explain how payroll affects the liabilities of a firm.