Question Details

Sandy Shoes Foot Inc. is involved in litigation 




Use the following information for questions 1 and 2.
Vanco Company has 35 employees who work 8-hour days and are paid hourly. On January 1, 2013, the company began a program of granting its employees 10 days of paid vacation each year. Vacation days earned in 2013 may first be taken on January 1, 2014. Information relative to these employees is as follows:
	Hourly	Vacation Days Earned	Vacation Days Used
Year	Wages	by Each Employee	by Each Employee
2013	$20.50	10	0
2014	22.50	10	8
2015	25.50	10	10

Vanco has chosen to accrue the liability for compensated absences at the current rates of pay in effect when the compensated time is earned.
	1.	What is the amount of expense relative to compensated absences that should be reported on Vanco- income statement for 2013?
a.	$0.
b.	$71,400.
c.	$63,000.
d.	$57,400.

	2.	What is the amount of the accrued liability for compensated absences that should be reported at December 31, 2015?
a.	$84,000.
b.	$197,400.
c.	$71,400.
d.	$96,600.

	3.	Qualpoint pays a weekly payroll of $170,000 that includes federal taxes withheld of $25,400, FICA taxes withheld of $15,780, and 401(k) withholdings of $18,000. What is the effect of assets and liabilities from this transaction?
a.	Assets decrease $170,000 and liabilities do not change.
b.	Assets decrease $128,820 and liabilities increase $41,180.
c.	Assets decrease $128,820 and liabilities decrease $41,180.
d.	Assets decrease $110,820 and liabilities increase $59,180.

 
	4.	Qualpoint provides its employees two weeks of paid vacation per year. As of December 31, 65 employees have earned two weeks of vacation time to be taken the following year. If the average weekly salary for these employees is $1,140, what is the required journal entry?
a.	Debit Salaries and Wages Expense for $148,200 and credit Salaries and Wages Payable for $148,200.
b.	No journal entry required.
c.	Debit Salaries and Wages Payable for $147,600 and credit Salaries and Wages Expense for $147,600.
d.	Debit Salaries and Wages Expense for $74,100 and credit Salaries and Wages Payable for $74,100.

	5.	Sandy Shoes Foot Inc. is involved in litigation regarding a faulty product sold in a prior year.  The company has consulted with its attorney and determined that it is possible that they may lose the case. The attorneys estimated that there is a 40% chance of losing. If this is the case, their attorney estimated that the amount of any payment would be $500,000. What is the required journal entry as a result of this litigation?
a.	Debit Litigation Expense for $500,000 and credit Litigation liability for $500,000.
b.	No journal entry is required.
c.	Debit Litigation Expense for $200,000 and credit Litigation Liability for $200,000.
d.	Debit Litigation Expense for $300,000 and credit Litigation Liability for $300,000.




Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help