points · general journal - kids in prison program · 1 . award: 10 out of 10.00 ..... points · on...

1 . award: 10 out of 10.00

.............. points · On September 11, 2012, Home Store sells a mower for $500 with a one-year warran~/ that covers parts. Warran~/ expense is estimated at 8% of sales. On July 24, 2013, the mower is brought in for repairs covered under the warran~/ requiring $35 in materials taken from the Repair Parts Inventory.

Prepare the September 11, 2012, entry to record the mower sale, and the July 24, 2013, entry to record the warran~/ repairs. (Assume all sales are cash sales and Home store uses a periodic inventory system and estimated warranty expense is re corded at the time of the sale.}

Date General Journal Debit Credit

Sep 11, 2014 Cash ./ 500./

Sales ./ 500./

Sep 11, 2014 Warranty expense ./ 40./

Estimated warranty liability ./ 40./

Jul24,2013 Estimated warranty liability ./ 35./

Repair parts inventory ./ 35./

g.vard:

2 10 out of . 10.00

·· · · · · · points · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · .. · BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $110, 100 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.8% and SUTA taxes are 2.9% of the first $7,000 paid to its employee.

Gross Pay through August Gross Pay for September a. $ 6,400 $ 800

Prepare the employer's September 30 journal entry to record salary expense and its related payroll liabilities for this employee. The employee's federal income taxes withheld by the employer are $80 for this pay period. (Round your answers to 2 decimal p laces.)

Taxes to be withheld from gross pay (Employee-paid taxes)

September earnings subiectto tax Tax Rate Tax Amount

1 Federal income tax

FICA-Social Security

FICA-Medicare

800 oo.; 800 .oo.;

Date General Journal

Sep. 30 Salaries expense

FICA- Social sec. taxes payable - FICA- Medicare taxes payable

Employee fed. inc. taxes payable

Accrued payroll payable

_J$ 6 20%.i

1.45%.il

80.00

49.60

11.60

141.20 Total taxes withheld 1$ ·~~~~~~~~---'

Debit Credit

"" 800.00.;j

"" 49.60.i

"" 11 60.i

"" 80.00.i

"" 658.80.i

-

3. eward: 10 out of 10.00 .............. points ...................................................... ..

Ticketsales, Inc., receives $5,000,000 cash in advance ticket sales for a four-Oate tour of Bon Jovi. Record the advance ticket sales on October 3 1. Record the revenue earned for the first concert date of November 5, assuming it represents one-fou rth of the advance ticket sales. (Assume the company has the policy of recording cash received in advance in the balance sheet account.)


Oct.31 Cash ./ 5,000,000./

Unearned ticket revenue ./ 5,000,000./

T I I

Nov.5 Unearned ticket revenue ./ 1,250,000./

Earned ticket revenue ./ 1,250,000./ -

4.

tfii iitiiiioiliili'i iii!iiriniioiiii iiiipiiii s io oi ii iiuiis°&oiis iJisiJiarii ifiiiiiOw r Keesha Co. borrows $200,000 cash on November 1, 2013, by signing a 90-day, 9% note with a face value of $200,000.

sward: 10 out of 10.00

·····························poinrs ············································································································· 1. On what date does this note mature?

0 January 25, 2014. <::>January 26, 2014. 0 January 27, 2014. 0 January 28, 2014. @January 30, 2014.

5. award: 20 out of 20.00 ..................... points ................................................................................... ..

2. & 3. What is the amount of interest expense in 2013 and 2014 from this note? (Use 360 days a year. Do not round intermediate cal'culations.)

Total through Interest Interest Expense Expense maturity 2013 2014

Principal $ 200,000./ $ 200,000./ $ 200,000./

Rate (%) 9%./ 9%./ 9%./

Time 90/360./ 60/360./ 30/360./

Total interest $ 4,500./ $ 3,000./ $ 1,500./

6. 10 out of 10.00

·····························poinr!r ··························································································································· 4(a)Prepare journal entry to record issuance of the note on November 1, 2013.

Date 11 General Journal

1--N_ov. 1 _Jcash Notes payable

--~~

4(b)Prepare journal entry to record accrual of interest at the end of 2013.

Debit

200,000.,i

Credit

200,000.,i


Dec. 31 Interest expense

Interest payable

.I 3,000.,i

3,000.,i

4(c) Prepare journal entry to record payment of tl1 e note at maturity, assuming no reversing entries were made on January 1.


Jan. 30 Notes payable .I 200,000.,i

Interest payable .I 3,000.,i

Interest expense .I 1,500.,i

Cash .I 204,500./

award:

7 10 out of . 10.00

·····························points· The following legal claims exist for Huprey Co. Identify the accounting treatment for each claim as either (a) a liabi l i~/ that is recorded or (b) an i tem described in notes to its financial statements.

1. Huprey (defendant) estimates that a pending lawsuit could result in damages of $1,250,000; it is reasonably possible t11at the plaintiff will win the case.

0 A liability that is recorded. @An item described in notes to its financial statements.

2. Huprey faces a probable loss on a pending lawsuit; the amount is not reasonably estimable.

® An item described in notes to its financial statements. 0 A liability that is recorded.

3. Hu prey estimates damages in a case at $.3,500,000 with a high probability of losing the case.

® A liability that is recorded. 0 An item described in notes to its financi.al statements.

award:

8 10 out of . 10.00 · ............ ·poii'its" ........................................................................................................................................................ .

BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $110, 100 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.8% and SUTA taxes are 2.9% of the first $7,000 paid to its employee.

Gross Pay through August

a. $ 6,400 b. 18,200 c. 103,800

Gross Pay for September

$ 800 2,100 8,000

Compute BMX's amounts for each of these four taxes as applied to the employee's gross earnings for September under each of three separate situations (a), (b), and (c). (Round your answers to 2 decimal places.)

)

ax September earnings

subject to tax Tax Rate

620%,,l $

1.45%.,I +--

0. 80 % .,I

Tax Amount .J 49.60 I FICA-Social Security

FICA-Medicare

~ )

if ax

FICA-Social Security .... FICA-Medicare

~ A

c)

if ax

FICA-Social Security -FICA-Medicare

~UTA SUTA

$ 800.00.,I

$

$

800.00.,I

600.00.,I

600.00.,I

September earnings subject to tax

2,1 00.00.,I

2,1 00.00.,I

0.00.,I

0.00.,I

September earnings subject to tax

6,300.00.,I

8,000.00.,I

0.00.,I

0.00.,I

11.60

4.80

2.90%.,I 17.40

.. Tax Rate Tax Amount

6.20% $ 130.20 I .... -I 1.45% 30.45

I -I

Tax Rate Tax Amount

6.20% $ 390.60 I - 1.45% 116.00

award:

9 10 out of . 10.00

·····························poiiits · Noura Company offers an annual bonus to employees if the company meets certain net income goals. Prepare the journal entry to record a $15,000 bonus owed to its workers (to be shared equally) at calendar year-end.

Date

Dec. 31

General Journal Employee bonus expense

Bonus payable -~~~

Debit

15,000./

Credit

15,000./ -~--

10. award: 10 out of 10.00 ·· .............. poifits ... .

On Januar/ 15, the end of the first biweekly pay period of the year, North Company's payroll register showed that its employees earned $35.00 O of sales salaries. Withholdings from the employees' salaries include FICA Social Securi~/ taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, $6,500 of federal income taxes, $772.50 of medical insurance deductions, and $120 of union dues. No employee earned more than $7,000 in this first period.

Prepare the journal entry to record North Company's January 15 (employee) payroll expenses and liabilities. (Round your answers to 2 decima I places.)


Jan. 15 Sales salaries expense ./ 35,000.00./

FICA- Medicare taxes payable ./ 507.50./

FICA- Social sec. taxes payable ./ 2, 170.00./

Employee medical insurance payable ./ 772.50./

Employee union dues payable ./ 120.00./

Employee fed. inc. taxes payable ./ 6,500.00./

Salaries payable ./ 24,930.00./

award:

11 10 out of . 10.00 .............. poir'its ............................................................. ..

Nishi Corporation prepares financial statements for each month-end. As part of its accounting process, estimated income taxes are accrued each month for 30% of the current month's net income. The income taxes are paid in the first month of each quarter for the amount accrued for the prior quarter. The following information is available for the fourth quarter of year 2013. When tax computations are completed on January 20, 2014, Nishi determines that the quarter's Income Taxes Payable account balance should be $28,300 on December 31, 2013 (its unadjusted balance is $24,690).

October 2013 net income November 2013 net income December 2013 net income

$28,600 19, 100 34,600

1. Determine the amount of the accounting adjustment (dated as of December 31, 2013) to produce the proper ending balance in the Income Taxes Payable account.

uni of accounting adjustment $ 3,610./ ..... ~~~~__;;.....;~~~~

2(a)Prepare journal entry to record the December 31, 2013, adjustment to the Income Taxes Payable account.

Date

Dec. 31

General Journal Income taxes expense

Income taxes payable

Debit Credit

.I 3,610./

.I 3,610./

2(b)Prepare journal entr1 to record the January 20, 2014, payment of the fourth-quarter taxes.

Date

Jan. 20

-

General Journal 1 Income taxes payable

Cash

Debit Credit

.I 28,300./l -

.I 28,300./ ----

12. award: 10 out of 10.00

On November 7, 2013, Mura Company borrows $160,000 cash by signing a 90-<iay, 8% note payable with a face value of $160,000. (Do not round your intermediate calculations.)

1. Compute the accrued interest payable on December 31, 2013.

Principal x Rate x Time = Interest

Total through maturity $ 160,000vl 8%vl 901360 vi $ 3,200vl

Year end interest accrual $ 160,000vl 8%vl 54/360 vi $ 1,920vl Interest recognized February LL

$ 160,000vl 8%vl 36/360 vi $ 1,280vl

2. Prepare the journal entry to record the accrued interest expense at December 31, 2013.

Date General Journal Debit Credit ,...~~~~~~ ..... ~~~~

Dec 31, 2013 Interest expense vi 1,920J

Interest payable vi 1,920vl -~--

3. Prepare the journal entr/ to record payment of the note at maturity. (Assume no reversing entries were made.)


Feb 05, 2014 Interest payable vi 1,920vl

Interest expense vi 1,280vl

Notes payable vi 160,000vl

Gash vi 163,200vl

sward:

13 10 out of . 10.00

............................. points ... Sera Corporation has made and recorded its quarterly income tax payments. After a final review of taxes for the year, the company identifies an additional $40,000 of income tax expense that should be recorded. A portion of this additional expense, $6,000, is deferred for payment in future years.

Prepare a journal entr/ to record Sera's year-end adjusting entry for income tax expense.


Dec. 31 Income taxes expense ./ 40,000./

Income taxes payable ./ 34,000./

Deferred income tax liability ./ 6,000./

14. award: 10 out of 10.00

Compute the times interest earned for Park Company, which reports income before interest expense and income taxes of $1,885,000, and interest expense of $145,000.

Choose Numerator:

Income before interest and inc tax ./

$ 1,885,000./

Tines interest earned

Choose Denominator:

Interest expense ./ = ---t

$ 145,000./ =

Tmes interest earned

Times interest earned

13 times

15. award: 10 out of 10.00

·· ··· · · · · points · · · · · · · · · · · · · · · · · · · · · · · · · · · ... The payroll records of Speedy Software show the following information about Marsha Gottschalk, an employee, for the weekly pay period ending September 30, 2013. Gottschalk is single and claims one allowance. Compute her Social Securi~/ tax (6.2%), Medicare tax (1 .45%), federal income tax withholding, state income tax (1 .0%), and net pay forthe current pay period. (Use the withholding table in Exn;M 11A6) (Round your intermediate calculations and final answers to 2 decimal places.)

Total (gross) earnings for current pay period Cumulative earnings of previous pay periods

$ 740 9,700

Gross pay $

Social security tax deduction $ 45.88./

Medicare tax deduction 10.73.,I

Federal income tax deduction 96 .00.,I

State income tax deduction 7.40.,I

Total deductions

r Net pay $

740.00.,I

160.01

579.99

16. sward: 10 out of 10.00

·· · .... · · ·points · · · · · · · · · · · · · · · · · · · · · · · · · · · .. · The following items appear on the balance sheet of a company with a two-month operating cycle. Identify the proper classification of each item as follows: C if it is a current liability, L if it is a long-term liabili~/, or N if it is not a liabili~/.

Classification Item

1. Notes payable (due in 120 days). c .I 2. Notes payable (mature in five years). L .I 3. Notes payable (due in 6 to 12 months). c .I 4. Current portion of long-term debt. c .I 5. Notes payable (due in 13 to 24 months). L .I 6. Sales taxes payable. c .I 7. Accounts receivable. N .I 8. Wages payable. c .I 9. FUT A taxes payable. c .I 10. Salaries payable. c .I

sward:

17 10 out of . 10.00

·····························pointir- · Listed below are a few transactions and events •Of Piper Company.

a. Piper Company records an adjusting entry for $10,000,000 of previously unrecorded cash sales (costing $5,000,000) and its sales taxes at a rate of 4%.

b. The company earned $50,000 of $125,000 previously received in advance for services.

Prepare any necessary adjusting entries at December 31, 2013, for Piper Company's year-end financial statements for each of the above separate transactions and events. (Piper has the policy of recording cash received in advance in balance sheet accounts.)

ransaction General Journal

•

a. Cash

Sales

Sales taxes payable

a. Cost of goods sold

Merchandise inventor/

b. Unearned services revenue

Earned services revenue

./

./

./

./

./

./

./

Debit Credit

10,400,000./

10,000,000./

400,000./

5,000,000./

5,000,000./

50,000./

50,000./ •

•

18. award: 10 out of 10.00

· ··············points ········································································································································ Merger Co. has ten employees, eac11 of whom earns $2,000 per month and has been employed since Januar/ 1. FICA Social Securi~/ taxes are 6.2% of the first $110,100 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.8% and SUTA taxes are 5.4% of the first $7,000 paid to each employee.

Prepare the March 31 journal entry to record the March payroll taxes expenses.


Mar. 31 Payroll taxes expense .I 2,770.00./

FICA- Medicare taxes payable .I 290.00./

FICA- Social sec. taxes payable .I 1,240.00./

Federal unemployment taxes payable .I 160.00./

State unemployment taxes payable .I 1,080.00./

a'Ward:

19 10outof • 10.00

·· ·· ·· ·· ·· ·· ·· points ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· · · Which of the following items are normally classified as a current liability for a company that has a 15-month operating cycle? (Select all that apply .) a 13 Note payable due in ·18 months.

a 13 Mote payable maturing in 2 years.

a 13 Portion of long- term note due in 15 months.

a 13 Salaries payable.

a 13 FICA taxes payable.

a 13 Mote payable due in 11 months.

20. award: 10 out of 10.00

· · · · · · ··poii'its · · · · · · · · · · · · · · · · · · · · · · · · · · · ·· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · Dextra Computing sells merchandise for $6 ,000 cash on September 30 (cost of merchandise is $3,900). The sales tax law requires Dextra to collect 5% sales tax on every dollar of merchandise sold. Record the entry for the $6,000 sale and its applicable sales tax. Also record the entry that shows the remittance of the 5% tax on this sale to the state government on October 15.

Date

Sep 30

Sep 30

Oct. 15

Cash

Sales

General Journal

Sales taxes payable

Cost of goods sold

Merchandise inventory

Sales taxes payable

Cash

Debit Credit

./ 6,300.,I

./

./

3,900./

300./

.................................... ~.

21 . award: 10 out of 10.00

Use the following information from separate companies a through f :

Net Income (Loss) Interest Expense Income Taxes $ 35,000

50,000 70,000

130,000 30,000

a. b. c. d . e. f.

$ 115,000 $44,000 110,000 16,000 100,000 12,000 235,000 14,000

59,000 14,000 (5,000) 10,000

Compute times interest earned.

0

Tines interest earned ratio

Company Choose Nwnerator: II I Choose Denominator: = Ratio

>- . a

b

c

d

e f

Income before interest & taxes ./ $ 194,000./

176,000./

182,000./

379,000./

103,000./

5,000./

I

I

I

I

I

I

I Interest expense

$ ./ =

44,000./ = -16,000./ = 12,000./ = - -= 14,000./

14,000./1=1-

1 0,000./~

Which company indicates the strongest ability to pay interest expense as it comes due?

O company a O company b O company c @company d O company e O company f

4.41

11.00

15.17

270; _ j

7 ~~ 0.50

oward:

22 10 out of . 10.00 .................... i>oiiits ......................................................................................................................................................................................................... .

Chavez Co.'s salaried employees earn four weeks vacation per year. It pays $312,000.00 in total employee salaries for 52 weeks but its employees work only 48 weeks. This means Chavez's total weekly expense is $6,500 ($312,000/48 weeks) instead of the $6,000 cash paid weekly to the employees ($312,000/52 weeks).

Prepare the journal entry to record Chavez's weekly vacation benefits expense.

Event

1

General Journal Vacation benefits expense

Vacation benefits payable

Debit

500./

Credit ----< ____ _,

500./ -

points · general journal - kids in prison program · 1 . award: 10 out of 10.00 ..... points · on...

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