De c. The likelihood of a payment occuring ls reasonably possible, and the estim

Question

De c. The likelihood of a payment occuring ls reasonably possible, and the estimated amount a $1.3 million. ()colo sur d. The likelihood of a payment occurring is remote, while thes estimated potential amount is $1.3 million. eclosare t teuiredl 13. Axel Inc offers its employees free medical, dental and life insurance coverage. It also matches employee contributions to a voluntary retirement plan dollar for dollar. Assume that no employee's wa the relevant wage bases. Payroll information for the payroll period ending January 15 are below. Make the appropriate journal entries in good form to record the payroll. ges exceed Wages and salaries Employee contributions to voluntary retirement plan Medical Insurance premiums paid by employer Dental Insurance premiums paid by employer Life Insurance premiuims paid by employer Federal and state income tax withheld FICA rate Federal and state unemployment tax rate s 2,750,000.00 $ 130,000.00 S 50,000.00 $ 17,500.00 8,750.00 $ 540,000.00 7.65% 6.20% Listed below are several terms and phrases associated with current liabilities. Match each List A to List B List B a. Recording a contingent List A divided by current liabilities estimated 1. Cash, current investments, and A/R all liability b. Disclosure of a contingent -2. Payment is probable and can be reasonably liability c. Interest expense d. FICA e. Commercial paper f. The riskiness of a business's obligations -3. Gift cards 4. Long-term debt maturing within one year -5. Social Security and Medicare 6. Interest expense is recorded in the period interest is incurred rather than in the period

Explanation / Answer

Question 12). c). Answer :- If loss is reasonably possible, disclosure is made in accounts by way of note. Accordingly, The contingent liability relating to existing condition or situation at the balance sheet date is disclosed by way of notes to accounts to the financial statement when the loss (likelihood of occurence of payment) is reasonably possible.

Question 12). d). Answer :- If the expected loss is remote, then the disclosure of contingent liability is not required i.e., Contingent loss is ignored at all. Accordingly, The contingent liability relating to the existing condition or situation at the balance sheet date is not disclosed by way of notes to accounts to the financial statement when the loss (likelihood of occurence of payment) is remote.

Question 14). Answer :-

List A Answer 1). Acid test ratio (Quick ratio). 2). Recording a contingent liability. 3). Interest expense 4). Commercial paper. 5). FICA 6). Accrual accounting.

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