final1 - Homework Market

1. An accountant has debited an account for $4,000 and credited a liability account for $2,100. Which of the following would be an incorrect way to complete the recording of this transaction? Credit another asset account for $1,900. Credit another liability account for $1,900. Credit an expense account for $1,900. Debit another asset account for $1,900. Credit the owner's capital account for $1,900. Alex Company has 10 employees, who earn a total of $2,650 in salaries each working day. They are paid on Monday for the five-day workweek ending on the previous Friday. Assume that year ended December 31, is a Wednesday and all employees will be paid salaries for five full days on the following Monday. The adjusting entry needed on December 31 is:

Debit Salaries Expense, $7,950; credit Salaries Payable, $7,950. Debit Salaries Expense, $5,300; credit Salaries Payable, $5,300. Debit Salaries Expense, $13,250; credit Salaries Payable, $13,250. Debit Salaries Payable, $7,950; credit Salaries Expense, $7,950. Debit Salaries Expense, $7,950; credit Cash, $7,950. The following transactions occurred during July:

1. Received $1,030 cash for services provided to a customer during July. 2. Received $3,500 cash investment from Barbara Hanson, the owner of the business. 3. Received $880 from a customer in partial payment of his account receivable which arose from sales in June. 4. Provided services to a customer on credit, $440. 5. Borrowed $7,300 from the bank by signing a promissory note. 6. Received $1,380 cash from a customer for services to be rendered next year.

What was the amount of revenue for July?

$14,090. $1,030. $2,850. $1,470. $3,730. An adjusting entry was made on year-end December 31 to accrue salary expense of $1,400. Which of the following entries would be prepared to record the $3,400 payment of salaries in January of the following year?

A.

Salaries Expense

3,400

Cash B.

Salaries Payable

3,400 3,400

Cash C.

Salaries Payable

3,400 1,400

Cash D.

Salaries Expense

1,400 1,400

Salaries Payable E.

1,400

Salaries Payable

1,400

Salaries Expense

2,000

Cash

Choice A Choice B Choice C Choice D Choice E

3,400

A company recorded 2 days of accrued salaries of $2,300 for its employees on January 31. On February 9, it paid its employees $8,800 for these accrued salaries and for other salaries earned through February 9. The January 31 and February 9 journal entries are: 1/31

Salaries Expense

2,300

Salaries Payable 2/9

2,300

Salaries Payable

8,800

Salaries Expense

2,300

Cash

1/31

Salaries Expense

11,100

2,300

Salaries Payable 2/9

2,300

Salaries Payable

6,500

Salaries Expense

2,300

Cash 1/31

Salaries Expense

8,800 2,300

Cash 2/9

Salaries Expense

2,300 8,800

Cash

1/31

Salaries Expense

8,800

2,300

Salaries Payable 2/9

Salaries Expense

2,300 8,800

Cash

1/31

Salaries Expense

8,800

2,300

Salaries Payable 2/9

2,300

Salaries Expense

6,500

Salaries Payable

2,300

Cash

8,800

On December 1, Miller Company borrowed $870,000, at 6% annual interest, from the Nomo Bank. Miller has 45 days before the first payment is required. What is the adjusting entry that Miller would need to make on December 31, the calendar year-end? (Use 360 days in a year.) Debit Interest Payable, $4,350; credit Interest Expense, $4,350. Debit Interest Expense, $4,350; credit Interest Payable, $4,350. Debit Interest Expense, $4,350; credit Cash, $4,350. Debit Interest Expense, $6,525; credit Interest Payable, $6,525. Debit Interest Expense, $52,200; credit Interest Payable, $52,200. On March 31, Phoenix, Inc. paid Melanie Publishing Company $20,520 for a 3-year subscription for five different magazines. The subscriptions started immediately. What is the adjusting entry that should be recorded by Melanie Publishing Company on December 31 of the first year if the credit to record the collection was made to Unearned Fees? Debit Unearned Fees, $20,520; credit Fees Earned, $20,520. Debit Unearned Fees, $6,840; credit Fees Earned, $6,840. Debit Unearned Fees, $15,390; credit Fees Earned, $15,390. Debit Unearned Fees, $1,710; credit Fees Earned, $1,710. Debit Unearned Fees, $5,130; credit Fees Earned, $5,130. On May 1, Year 1, Carter Advertising Company received $3,960 from Kaitlyn Breanna for advertising services to be completed April 30 of the following year. The Cash receipt was recorded as unearned fees. Assume no entry was made for unearned fees during year 2. The adjusting entry for the year ended December 31, Year 2 would include: a debit to Earned Fees for $3,960. a debit to Unearned Fees for 1,320. a credit to Unearned Fees for $1,320. a debit to Earned Fees for $2,640. a credit Earned Fees for $2,640. At the beginning of January of the current year, Thomas Law Center's ledger reflected a normal balance of $52,200 for accounts receivable. During January, the company collected $15,000 from customers on account and provided additional services to customers on account totaling $12,600. Additionally, during

January one customer paid Thomas $5,100 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should be: $2,400. $49,800. $49,500. $54,600. $54,900. At the end of the current year, Norman Company reported total liabilities of $350,000 and total equity of $150,000. The company's debt ratio on the last year-end was: 46.7%. 42.9%. 70.0%. 21.4%. Cannot be determined from the information provided. Based on the following information from Raptor Company's balance sheet, calculate the current ratio.

Current assets

$ 73,000

Long-term investments

64,000

Plant assets

264,000

Current liabilities

53,000

Long-term liabilities

104,000

Raptor, Capital

244,000

.73. 2.58. 2.40.

.87. 1.38. On October 1, Courtland Company sold merchandise in the amount of $6,800 to Carter Company, with credit terms of 1/10, n/30. The cost of the items sold is $4,500. Courtland uses the periodic inventory system. On October 4, Carter returns some of the merchandise. The selling price of the merchandise is $1,000 and the cost of the merchandise returned is $600. Carter pays the invoice on October 8, and takes the appropriate discount. The journal entry that Courtland makes on October 8 is: Cash

6,800

Accounts receivable Cash

6,800 4,500

Accounts receivable

4,500

Cash

5,742

Sales discounts

58

Accounts receivable Cash

5,800 6,732

Accounts receivable

6,732

Cash

6,732

Sales discounts

68

Accounts receivable

6,800

Jackson Company has sales of $318,000 and cost of goods available for sale of $271,800. If the gross profit ratio is typically 30%, the estimated cost of the ending inventory under the gross profit method would be: $49,200 $176,400 $46,200 $95,400 Impossible to determine from the information provided.

On July 24 of the current year, The Georgia Peach Company experienced a natural disaster that destroyed the company's entire inventory. At the beginning of July, the company reported beginning inventory of $226,950. Inventory purchased during July (until the date of the disaster) was $198,000. Sales for the month of July through July 24 were $642,700. Assuming the company's typical gross profit ratio is 50%, estimate the amount of inventory destroyed in the natural disaster. $217,750 $321,350 $157,888 $103,600 $212,475 A company normally sells its product for $30 per unit. However, the selling price has fallen to $25 per unit. This company's current inventory consists of 300 units purchased at $26 per unit. Replacement cost has now fallen to $23 per unit. Calculate the value of this company's inventory at the lower of cost or market. $7,500. $6,850. $7,000. $6,900. $7,800. A company that has operated with a 30% average gross profit ratio for a number of years had $109,000 in sales during the first quarter of this year. If it began the quarter with $18,900 of inventory at cost and purchased $72,900 of inventory during the quarter, its estimated ending inventory by the gross profit method is: $32,700. $29,700. $15,500. $22,890. $18,900. Gotham Company reported a December 31 ending inventory balance of $412,000. The following additional information is also available:

• The ending inventory balance of $412,000 included $73,200 of consigned inventory for which Gotham was the consignor. • The ending inventory balance of $412,000 included $24,400 of office supplies that were stored in the warehouse and were to be used by the company's supervisors and managers during the coming year. • The ending inventory balance of $412,000 did not include goods costing $49,200 that were purchased by Gotham on December 28 and shipped FOB destination on that date. Gotham did not receive the goods until January 2 of the following year. • The ending inventory balance of $412,000 included damaged goods at their original cost of $40,400. The net realizable value of the damaged goods was $11,200. • The ending inventory balance of $412,000 included $44,200 of consigned inventory for which Gotham was the consignee.

Based on this information, the correct balance for ending inventory on December 31 is: $314,200 $358,400 $241,000 $303,000 $338,600 Herald Company had sales of $138,500, sales discounts of $2,700, and sales returns of $3,900. Herald Company's net sales equals: $145,100. $6,600. $135,800. $131,900. $138,500. A company has inventory of 15 units at a cost of $15 each on June 1. On June 3, it purchased 25 units at $17 each. 17 units are sold on June 5. Using the FIFO periodic inventory method, what is the cost of the 17 units that were sold?

$255. $280. $270. $263. $259. Bentley records adjusting entries on December 31 year end. At December 31, employees had earned $13,500 of unpaid and unrecorded salaries. The next payday is January 3, during which $33,000 will be paid. Prepare the January 1 journal entry to reverse the effect of the December 31 salary expense accrual. Debit Salaries expense $13,500; credit Salaries payable $13,500. Debit Salaries expense $19,500; debit Salaries payable $13,500; credit Cash $33,000. Debit Salaries payable $19,500; credit Cash $19,500. Debit Salaries payable $13,500, credit Salaries expense $13,500. Debit Salaries expense $19,500; credit Salaries payable $19,500. A company that uses the net method of recording invoices made a purchase of $1,900 with terms of 2/10, n/30. The entry to record the purchase would include:

A credit to Cash for $1,862. A debit to Cash for $1,862. A debit to Discounts Lost for $38. A credit to Discounts Lost for $38. A debit to Merchandise Inventory for $1,862. In the process of reconciling Marks Enterprises' bank statement for September, Mr. Marks compiles the following information:

Cash balance per company books on September 30

$ 6,215

Deposits in transit at month-end

$ 1,420

Outstanding checks at month-end

$ 740

Bank charge for printing new checks

$ 105

Note receivable and interest collected by bank on Marks' behalf

$ 650

A check given to Marks during the month by a customer is returned by the bank as NSF

$ 600

The adjusted cash balance per the books on September 30 is:

$6,760 $5,720 $4,000 $6,160 $8,040 The following information is available for Johnson Manufacturing Company at June 30:

Cash in bank account Inventory of postage stamps Money market fund balance

$ 6,455 74 12,400

Petty cash balance

350

NSF checks from customers returned by bank

867

Postdated checks received from customers

391

Money orders

257

A nine-month certificate of deposit maturing on December 31 of current year

8,000

Based on this information, Johnson Manufacturing Company should report Cash and Cash Equivalents on June 30 of: $20,072

$20,146 $19,462 $19,205 $15,062 The amount due on the maturity date of a $10,500, 120-day 6%, note receivable is (Use 360 days a year. Do not round intermediate calculations): $10,500. $10,710. $11,130. $9,870. $10,290. Martha Company has an established petty cash fund in the amount of $500. The fund was last reimbursed on November 30. At the end of December, the fund contained the following petty cash receipts:

December 4

Freight charge for merchandise purchased

$ 46

December 7

Freight charge for delivery to customer

$ 70

December 12

Purchase of office supplies

$ 35

December 18

Donation to charitable organization

$ 54

If, in addition to these receipts, the petty cash fund contains $284.00 of cash, the journal entry to reimburse the fund on December 31 will include:

A credit to Office Supplies of $70. A debit to Transportation-In of $81. A debit to Cash Over and Short of $11.00. A credit to Cash Over and Short of $11.00.

A debit to Transportation-Out of $81. At the end of the day, the cash register tape shows $995 in cash sales but the count of cash in the register is $1,040. The proper entry to account for this excess includes a:

Credit to Cash Over and Short for $45. Debit to Petty Cash for $45. Debit to Cash for $45. Credit to Cash for $45. Debit to Cash Over and Short for $45. A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts: Accounts receivable

$ 351,000 debit

Allowance for uncollectible accounts

640 credit

Net sales

796,000 credit

All sales are made on credit. Based on past experience, the company estimates 0.4% of credit sales to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense? Debit Bad Debts Expense $2,544; credit Allowance for Doubtful Accounts $2,544. Debit Bad Debts Expense $3,184; credit Allowance for Doubtful Accounts $3,184. Debit Bad Debts Expense $2,044; credit Allowance for Doubtful Accounts $2,044. Debit Bad Debts Expense $3,824; credit Allowance for Doubtful Accounts $3,824. Debit Bad Debts Expense $1,404; credit Allowance for Doubtful Accounts $1,404. If a check correctly written and paid by the bank for $541 is incorrectly recorded in the company's books for $514, how should this error be treated on the bank reconciliation?

Add $27 to the book balance.

Subtract $27 from the book balance. Subtract $27 from the bank's balance and add $45 to the book's balance. Add $27 to the bank's balance. Subtract $27 from the bank's balance. Paoli Pizza bought $5,400 worth of merchandise from TechCom and signed a 45-day, 12% promissory note for the $5,400. TechCom's journal entry to record the sales portion of the transaction is (Use 360 days a year. Do not round intermediate calculations): Debit Accounts Receivable $5,481; credit Sales $5,481. Debit Accounts Receivable $5,400; credit Sales $5,400. Debit Notes Receivable $5,481; credit Sales $5,481. Debit Notes Receivable $5,400; credit Sales $5,400. Debit Notes Receivable $5,400; debit Interest Receivable $81; credit Sales $5,481. Assume that the custodian of a $450 petty cash fund has $55.1 in coins and currency plus $390.50 in receipts at the end of the month. The entry to replenish the petty cash fund will include: A debit to Petty Cash for $390.50. A credit to Cash for $394.90. A debit to Cash for $394.90. A debit to Cash for $386.10. A credit to Cash Over and Short for $4.40.

Arena Company's salaried employees earn two weeks vacation per year. It pays $837,200 in total employee salaries for 52 weeks but its employees work only 50. Record Arena Company's weekly journal entry to record the vacation benefit expense: Debit Vacation Benefits Expense $16,100; credit Vacation Benefits Payable $16,100. Debit Vacation Benefits Payable $16,100; credit Vacation Benefits Expense $16,100.

Debit Vacation Benefits Expense $644; credit Vacation Benefits Payable $644. Debit Vacation Benefits Expense $17,459; credit Vacation Benefits Payable $17,459. Debit Vacation Benefits Payable $16,744; credit Vacation Benefits Expense $16,744. Phil Phoenix is paid monthly. For the month of January of the current year, he earned a total of $9,188. The FICA tax rate for social security is 6.2% and the FICA tax rate for Medicare is 1.45%. The FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The amount of Federal Income Tax withheld from his earnings was $1,524.57. What is the total amount of taxes withheld from the Phoenix's earnings? (Round your intermediate calculations and final answer to two decimal places.) $1,657.80 $4,146.57 $2,622.00 $2,661.46 $2,227.46 A company's old machine that cost $46,000 and had accumulated depreciation of $35,400 was traded in on a new machine having an estimated 20-year life with an invoice price of $56,600. The company also paid $48,400 cash, along with its old machine to acquire the new machine. If this transaction has commercial substance, the new machine should be recorded at: $54,200. $46,000. $59,000. $10,600. $56,600. During August, Arena Company sells $351,000 in product that has a one year warranty. Experience shows that warranty expenses average about 5% of the selling price. The warranty liability account has a balance of $11,300 before adjustment. Customers returned product for warranty repairs during the month that used $7,900 in parts for repairs. The entry to record the estimated warranty expense for the month is: Debit Warranty Expense $6,250; credit Estimated Warranty Liability $6,250. Debit Estimated Warranty Liability $7,900; credit Warranty Expense $7,900.

Debit Warranty Expense $14,150; credit Estimated Warranty Liability $14,150. Debit Estimated Warranty Liability $17,550; credit Warranty Expense $17,550. Debit Warranty Expense $17,550; credit Estimated Warranty Liability $17,550. Phil Phoenix is paid on a monthly basis. For the month of January of the current year, he earned a total of $9,288. FICA tax for Social Security is 6.2% and the FICA tax for Medicare is 1.45%. The FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The amount of Federal Income Tax withheld from his earnings was $1,541.17. What is the amount of the employer's monthly payroll tax expenses for this employee? (Round your intermediate calculations and final answer to two decimal places.) $378.00 $1,144.54 $56.00 $575.86 $134.68 Maryland Company offers a bonus plan to its employees equal to 3% of net income. Maryland's net income is expected to be $955,000. The amount of the employee bonus expense is estimated to be $28,850 $29,850 $28,650 $29,536 $27,816 A company sells computers at a selling price of $2,050 each. Each computer has a 2 year warranty that covers replacement of defective parts. It is estimated that 3% of all computers sold will be returned under the warranty at an average cost of $155 each. During November, the company sold 35,000 computers, and 450 computers were serviced under the warranty at a total cost of $60,000. The balance in the Estimated Warranty Liability account at November 1 was $31,500. What is the company's warranty expense for the month of November? $69,750 $60,000

$81,375 $28,500 $162,750 An employee earned $46,800 during the year working for an employer. The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The employee's annual FICA taxes amount is: $2,901.60. Zero, since the employee's pay exceeds the FICA limit. $7,160.40. $3,580.20. $678.60 On March 17, Grady Company agrees to accept a 60-day, 6%, $5,100 note from Alert Company to extend the due date on an overdue account. What is the journal entry needed to record the payment of the note by Alert Company on the maturity date? Debit Notes Payable $5,100; credit Interest Expense $51, credit Cash $5,049. Debit Cash $5,151; credit Interest Revenue $51; credit Notes Receivable $5,100. Debit Notes Payable $5,100; debit Interest Expense $77; credit Cash $5,177. Debit Notes Payable $5,100; debit Interest Expense $51; credit Cash $5,151. Debit Cash $5,151; credit Interest Revenue $51; credit Notes Payable $5,100. Cambria owns equipment that cost $105,500 with accumulated depreciation of $72,000. Cambria asks $38,000 for the equipment but sells the equipment for $35,000. Compute the amount of gain or loss on the sale. $1,500 loss. $4,500 loss. $3,000 gain. $1,500 gain.

$4,500 gain. A company has 40,000 shares of common stock outstanding. The stockholders' equity applicable to common shares is $470,000, and the par value per common share is $10. The book value per share is: $10.00. $47.00. $11.75. $0.09. $1.75. A company's board of directors votes to declare a cash dividend of $1.55 per share. The company has 31,000 shares authorized, 26,000 issued, and 25,500 shares outstanding. The total amount of the cash dividend is: $40,300. $79,825. $48,050. $39,525. $47,050. A company issued 140 shares of $100 par value stock for $15,000 cash. The total amount of paid-in capital is: $100. $14,000. $1,400. $1,000. $15,000. A company has earnings per share of $9.20. Its dividend per share is $1.25, its market price per share is $111.32, and its book value per share is $87. Its price-earnings ratio equals: 9.20.

7.36. 8.10. 12.10. 9.46. Renee Jackson is a partner in Sports Promoters. Her beginning partnership capital balance for the current year is $56,700, and her ending partnership capital balance for the current year is $63,700. Her share of this year's partnership income was $6,950. What is her partner return on equity? 9.17% 10.91% 11.54% 8.16% 12.26% A corporation had 15,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 6,000 shares. At the time of the stock dividend, the market value per share was $22. The entry to record this dividend is: No entry is needed. Debit Common Stock Dividend Distributable $132,000; credit Retained Earnings $132,000. Debit Retained Earnings $132,000; credit Common Stock Dividend Distributable $132,000. Debit Retained Earnings $132,000; credit Common Stock Dividend Distributable $60,000; credit Paid-In Capital in Excess of Par Value, Common Stock $72,000. Debit Retained Earnings $60,000; credit Common Stock Dividend Distributable $60,000. The following data has been collected about a company's stockholders' equity accounts:

Common stock $10 par value 22,000 shares authorized and 11,000 shares issued, 1,200 shares in treasury

$110,000

Paid-in-capital in excess of par value, common stock

52,000

Retained earnings

27,000

Treasury stock

14,040

The treasury shares were all purchased at the same price. The cost per share of the treasury stock is: $11.70. $10.70. $1.28. $10.00. $1.43. The partnership agreement for Smith Wesson & Davis, a general partnership, provided that profits be shared between the partners in the ratio of their financial contributions to the partnership. Smith contributed $135,000, Wesson contributed $81,000 and Davis contributed $27,000. In the partnership's first year of operation, it incurred a loss of $243,000. What amount of the partnership's loss, should be absorbed by Smith? (Do not round your intermediate calculations and round your final answer to the nearest whole dollar amount.) $27,000 $135,000 $121,500 $60,750 $81,000 Mack, Harris, and Huss are dissolving their partnership. Their partnership agreement allocates income and losses equally among the partners. The current period's ending capital account balancesare Mack, $16,900, Harris, $16,900, Huss, $(3,900). After all the assets are sold and liabilities are paid, but before any contributions to cover any deficiencies, there is $29,900 in cash to be distributed. Huss pays $3,900 to cover the deficiency in his account. The general journal entry to record the final distribution would be: Debit Mack, Capital $16,900; debit Harris, Capital $16,900; credit Huss, Capital $3,900; credit Cash $29,900. Debit Mack, Capital $16,900; debit Harris, Capital $16,900; credit Cash $33,800. Debit Mack, Capital $14,950; debit Harris, Capital $14,950; credit Cash $29,900. Debit Cash $29,900; debit Huss, Capital $3,900; credit Mack, Capital $16,900; credit Harris, Capital $16,900.

Debit Mack, Capital $9,966; debit Harris, Capital $9,967; debit Huss, Capital $9,967; credit Cash $29,900.

50. Smith, West, and Krug form a partnership. Smith contributes $183,000, West contributes $152,500, and Krug contributes $274,500. Their partnership agreement calls for the income or loss division to be based on the ratio of capital invested. If the partnership reports income of $176,000 for its first year, what amount of income is credited to Smith's capital account? (Do not round your intermediate calculations.) $60,300. $52,800. $79,200. $58,667. $44,000.