Home / Questions / Abby Smith earned wages of $500 for one week. Her withholdings included CPP $21, EI $9 and
Abby Smith earned wages of $500 for one week. Her withholdings included CPP $21, EI $9 and income tax $75. In a synoptic journal under the modified cash system, her employer would record the payment as follows:
A) debit Salary Expense $500, credit CPP Payable $21, credit EI payable $9, credit Income Tax Payable $75, credit Cash $395.
B) the employer cannot use the modified cash basis for recording payment of payroll.
C) debit Salary Expense $500, credit Cash $500.
D) debit Salary Expense $395, credit Cash $395.
12) Payroll taxes withheld from employees during the period were $300 CPP, $120 EI and $1,000 Income Tax. The entry to record payment of the taxes withheld and the employer's share in the synoptic journal under the modified cash system would be
A) debit payroll tax expense $580, credit Cash $580.
B) debit Payroll Tax Expense $468, debit CPP Payable $300, debit EI Payable $120, debit Income Tax Payable $1,000, credit Cash $1,888.
C) debit Payroll Tax Expense $468, debit CPP Payable $300, debit EI Payable $120, credit Cash $888.
D) debit Payroll Tax Expense $420, debit CPP Payable $300, debit EI Payable $120, debit Income Tax Payable $1,000, credit Cash $1,840.
13) Curly Ribbon Co. uses a synoptic journal under the modified cash-basis. How should a purchase on account of $1,000 of ribbons for resale be recorded?
A) Debit Supplies $1,000, credit Accounts Payable $1,000
B) Debit Supplies $1,000, credit Cash $1,000
C) Debit Purchases $1,000, credit Accounts Payable $1,000
D) None of the above are correct.
14) Which company is most likely to use the cash basis of accounting?
A) Service company with no inventory
B) Department store
C) Accounting firm
D) Real estate office
15) Under the modified cash-basis method, the amount paid for equipment in one year cannot be treated as an expense of the period.
16) To avoid distorting the financial reports, the modified cash-basis makes adjustments for amortization, purchases of insurance, and large amounts of supplies.
17) Accounts that are used the least in the business should have a special column.
18) When the synoptic journal is used, the cash balance can be determined easily.
19) Under the cash basis system, CPP Payable and EI Payable, and Income Tax Payable are considered liability accounts.
20) Payroll Tax Expense is used to record the employer's payroll taxes.
21) To prove the journal means that debits and credits equal.
22) A synoptic journal on a cash basis would have an accounts payable column.
Dec 06 2019 Read more Less More
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