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Chapter 10 1. T F Commonly, current liabilities are payable within one year and long-term liabilities are payable more than one year from now 2. T F Given a choice, most companies would prefer to report a liability as current rather than long-term because it may cause the firm to appear less risky. (Page 506) 3. T F The term for bonds that have specific assets pledged as collateral is Convertible bonds. 4. T F Sales taxes collected from customers by the seller are not an expense, instead they represent current liabilities payable to the government. 5, T F Kelly Corp issues $200,000, 5 year, 7% bonds at face value. The entry to record the issuance of these bonds would include a debit to Bonds payable for $200,000. (Page 516) 6. An employee has gross earnings of $1,600 and withholdings of $25 for income taxes, $5 for social security taxes and $3 for medicare taxes. The employer also pays a total of $5 for social security and $3 for medicare taxes, $12 for FUTA and $2 for SUTA. What is the total cost of this employee to the employer? Assume no other information. 7. Which of the following is not a liability? a. An unused line of credit c. Sales tax collected from customers b. Current portion of long-term debt d. Unearned revenues 8. On December 11, 2017, Jaron Co received magazine subscriptions for 2018 in cash for $200. Make the entry to record the receipt of this cash in 2015. 9. If you buy lunch for $16.35 that includes 9% sales tax, how much did the restaurant charge you for lunch AND how much do they owe for sales taxes? 10. United Supply has a $25 million liability at December 31, 2017, of which $5 million is payable in each of the next five years. What portion of the $25 million is current and what amount is long term at 12/31/17? Current Long-term: 11. The information below relates to Axel Inc-for their January 15th payroll. Make the appropriate journal entries in good form to record the payroll. Wages and salaries Federal income tax withheld State income tax withheld Contributions to 401(k) plan by employees FICA rate Federal and state unemployment tax rate (combined rate) $ 2,750,000.00 $400,000.00 140,000.00 $35,000.00 7.65% 6.20%