A) One of the largest liabilities, particularly for service-related companies, is payroll.

1) Define (in your own words) what Gross Pay and Net Pay are.

2) Assume you work for a company in sales and therefore are entitled to not only hourly pay, but commission and bonus as well. You work 40 hours in a payroll week. Calculate your gross pay for your company if you make $x per hour (you select your rate!), earn a 5% bonus (of gross pay), and earn 10% commission (of gross pay).

3) Unfortunately, you do not get to keep all your Gross Pay. Assuming you have the following withholding deductions taken out of your pay, now calculate your Net Pay

Withholding deductions:
?Employee income tax (20%)
?Employee OASDI tax (see book for how to calculate)
?Employee Medicare tax (1.45%)
?Employee health insurance	75
?Employee contribution to United Way	??20
??Total withholdings

4) Now prepare the journal entry which your company would record to book the above payroll expense for the week.

B) A contingent liability is a potential, rather than an actual, liability because it depends on a future event. Describe how a business would determine whether or not to record a contingent liability, and whether the likelihood of the event occurring is important in determining whether or not to record that liability is

C) Warranties are often given to customers for products they buy. Why are warranty liabilities usually recognized on the balance sheet as liabilities when they are uncertain? And provide a company or industry in which you might see this impact.