1 1. award:... points On September 11, 20 12, 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, 20 13, 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, 20 12, entry to record the mower sale, and the July 24, 20 13, 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, Cash./ 500./ Sales./ 500./ Sep 11, Warranty expense./ 40./ Estimated warranty liability./ 40./ Jul24,2013 Estimated warranty liability./ 35./ Repair parts inventory./ 35./
2 g.vard: 2. 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 $80 for this pay period. (Round your answers to 2 decimal places.) Taxes to be withheld from gross pay (Employee-paid taxes) Federal income tax FICA-Social Security FICA-Medicare September earnings subiectto tax Tax Rate Tax Amount 800 oo.; 800.oo.; 1 _J$ 6 20%.i 1.45%.il Total taxes withheld 1$ ~~~~~~~~---' Date General Journal Sep. 30 Salaries expense FICA- Social sec. taxes payable - FICA- Medicare taxes payable Employee fed. inc. taxes payable Accrued payroll payable "" "" "" "" Debit ;j Credit i i i i -
3 eward: 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.) Date General Journal Debit Credit 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, sward: poinrs 1. On what date does this note mature? 0 January 25, <::>January 26, January 27, January 28, 30, 2014.
5 5. award: 20 out of... points & 3. What is the amount of interest expense in and from this note? (Use 360 days a year. Do not round intermediate cal'culations.) Total through maturity Interest Interest Expense Expense 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 6. poinr!r 4(a)Prepare journal entry to record issuance of the note on November 1, Date 11 General Journal 1--N_ov. 1 _Jcash Notes payable --~~ Debit 200,000.,i Credit 200,000.,i 4(b)Prepare journal entry to record accrual of interest at the end of Date General Journal Debit Credit Dec. 31 Interest expense.i 3,000.,i Interest payable 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. Date General Journal Debit Credit Jan. 30 Notes payable.i 200,000.,i Interest payable.i 3,000.,i Interest expense.i 1,500.,i Cash.I 204,500./
7 award: 7. points The following legal claims exist for Huprey Co. Identify the accounting treatment for each claim as either (a) a l iab i 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 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.
8 award: 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 FICA-Social Security FICA-Medicare ~ ) if ax FICA-Social Security... FICA-Medicare ~ A c) if ax - FICA-Medicare ~UTA SUTA FICA-Social Security September earnings subject to tax $ ,I $ $ ,I ,I ,I September earnings subject to tax 2, ,I 2, ,I 0.00.,I 0.00.,I 0.00.,I 0.00.,I Tax Rate Tax Rate 620%,,l $ 1.45%.,I %.,I... - Tax Amount.J I %.,I Tax Amount 6.20% $ I 1.45% September earnings subject to tax Tax Rate Tax Amount 6, ,I % $ I 8, ,I 1.45% I I I
9 award: 9. 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 General Journal Dec. 31 Employee bonus expense Bonus payable -~~~ Debit 15,000./ Credit 15,000./ -~--
10 10. award:... 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 S e curi~/ taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, $6,500 of federal income taxes, $ 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.) Date General Journal Debit Credit Jan. 15 Sales salaries expense./ 35, / FICA- Medicare taxes payable./ / FICA- Social sec. taxes payable./ 2, / Employee medical insurance payable./ / Employee union dues payable./ / Employee fed. inc. taxes payable./ 6, / Salaries payable./ 24, /
11 award: 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 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, , 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 Income taxes expense General Journal Income taxes payable Debit Credit.I 3,6 10./.I 3,610./ 2(b)Prepare journal entr1 to record the January 20, 2014, payment of the fourth-quarter taxes. - Date Jan Income taxes payable Cash General Journal Debit Credit.I 28,300./l -.I ,300./
12 12. award: 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, Principal x Rate x Time = Interest Total through maturity $ 160,000vl 8%vl 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, ,...~~~~~~ ~~~~ 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.) Date General Journal Debit Credit Feb 05, 2014 Interest payable vi 1,920vl Interest expense vi 1,280vl Notes payable vi 160,000vl Gash vi 163,200vl
13 13 sward: 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. Date General Journal Debit Credit Dec. 31 Income taxes expense./ 40,000./ Income taxes payable./ 34,000./ Deferred income tax liability./ 6,000./
14 14. award: 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 15. award: points... The payroll records of Speedy Software show the following information about Marsha Gottschalk, an employee, for the weekly pay period ending September 30, Gottschalk is single and claims one allowance. Compute her Social S e curi~/ 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 $ / Medicare tax deduction Federal income tax deduction State income tax deduction ,I ,I 7.40.,I Total deductions Net pay $ r ,I
16 16. sward:... 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
17 17 sward:. 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./././ Debit 10,400,000./ Credit 10,000,000./ 400,000./ a. Cost of goods sold Merchandise inventor/././ 5,000,000./ 5,000,000./ b. Unearned services revenue Earned services revenue././ 50,000./ 50,000./
18 18. award: 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. Date General Journal Debit Credit Mar. 31 Payroll taxes expense.i 2, / FICA- Medicare taxes payable.i / FICA- Social sec. taxes payable.i 1, / Federal unemployment taxes payable.i / State unemployment taxes payable.i 1, /
19 a'ward: 19 10outof 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. 13 Portion of long- term note due in 15 months. 13 Salaries payable. 13 FICA taxes payable. a 13 Mote payable due in 11 months.
20 20. award: 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 Cash Sales Sales taxes payable General Journal Debit./ 6,300.,I././ Credit Sep 30 Cost of goods sold Merchandise inventory 3,900./ Oct. 15 Sales taxes payable 300./ Cash... ~.
21 21. award: Use the following information from separate companies a through f : a. b. c. d. e. f. Net Income (Loss) Interest Expense Income Taxes $ 115,000 $44,000 $ 35, ,000 16,000 50, ,000 12,000 70, ,000 14, ,000 59,000 14,000 30,000 (5,000) 10,000 0 Compute times interest earned. Tines interest earned ratio Company Choose Nwnerator: II I Choose Denominator: = Ratio Income before interest & taxes >-../ I I Interest expense./ = - a $ 194,000./ I $ 44,000./ = 4.41 b 176,000./ I 16,000./ = c 182,000./ I 12,000./ = d 379,000./ I 14,000./ = e 103,000./ I f 5,000./ 14,000./1=1-1 0, 000./~ 270; _ j 7 ~~ 0.50 Which company indicates the strongest ability to pay interest expense as it comes due? O company a O company b O company d O company e O company f
22 oward: i>oiiits... Chavez Co.'s salaried employees earn four weeks vacation per year. It pays $3 12, in total employee salaries for 52 weeks but its employees work only 48 weeks. This means Chavez's total weekly expense is $6,500 ($3 12,000/48 weeks) instead of the $6,000 cash paid weekly to the employees ($3 12,000/52 weeks). Prepare the journal entry to record Chavez's weekly vacation benefits expense. Event 1 General Journal Vacation benefits expense Vacation benefits payable Debit Credit ----<_, 500./ 500./ -