Question 1

The old age,survivors,and disability insurance component of FICA tax is imposed on the entire amount of an individual employee's earnings.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following accounting principles requires that warranty expense must be estimated and recognized in the same period when the related sales revenue is recognized?

Accepted Answer

A)  the matching principle 
B)  the disclosure principle 
C)  the revenue principle 
D)  the consistency principle 
A)  the matching principle 
B)  the disclosure principle 
C)  the revenue principle 
D)  the consistency principle

Question 3

On December 31,2018,Barry Company borrowed $500,000 by signing a five-year,8% note payable.The note is payable in five yearly installments of $100,000 plus interest,due at the end of every year beginning on December 31,2019.What amount represents the current portion of Long-term Notes Payable at December 31,2018?

Accepted Answer

The current portion of notes payable is

Question 4

Lana Appliances sells dishwashers with a four-year warranty.In 2018,sales revenue for dishwashers is $96,000.The company estimates warranty expense at 4.5% of revenues.What is the 2018 warranty expense? (Round your final answer to the nearest dollar.)

Accepted Answer

A)  $4320 
B)  $1080 
C)  $0 
D)  $3388 
A)  $4320 
B)  $1080 
C)  $0 
D)  $3388

Question 5

Tan's gross pay for the week is $1500.His year-to-date pay is under the limit for OASDI.Assume that the rate for state and federal unemployment compensation taxes is 6% and that Tan's year-to-date pay has previously exceeded the $7000 cap.What is the amount of state and federal unemployment tax that his employer must record as payroll tax expense and pay to the federal and state governments?

Accepted Answer

A)  $0 
B)  $21.75 
C)  $111.75 
D)  $90 
A)  $0 
B)  $21.75 
C)  $111.75 
D)  $90

Question 6

A $45,000,two-month,9% note payable was issued on December 1,2018.What is the amount of interest expense recorded in the year 2019? (Round the final calculation to the nearest dollar.)

Accepted Answer

A)  $4050 
B)  $338 
C)  $675 
D)  $45,675 
A)  $4050 
B)  $338 
C)  $675 
D)  $45,675

Question 7

When an employee takes a paid vacation,the Vacation Benefits Payable account will be decreased with a credit.

Accepted Answer

A) True 
 B)False

Question 8

For the month of September,Seawide Sales Company recorded gross pay of $74,500.The net pay for the month amounted to $59,500.The salaries are paid on October 5.Which of the following is the journal entry for the payment of salaries?

Accepted Answer

A)  $$\begin{array} { | c | r | r | } 
\hline \text { Salaries and Wages Payable } & 59,500 & \
\hline \text { Cash } & & 59,500 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | r | r | } 
\hline \text { Salaries and Wages Payable } & 74,500 & \
\hline \text { Cash } & & 74,500 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | r | r | } 
\hline \text { Salaries and Wages Expense } & 59,500 & \
\hline \text { Cash } & & 59,500 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 74,500 & \
\hline \text { Salaries and Wages Expense } & & 74,500 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | c | r | r | } 
\hline \text { Salaries and Wages Payable } & 59,500 & \
\hline \text { Cash } & & 59,500 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | r | r | } 
\hline \text { Salaries and Wages Payable } & 74,500 & \
\hline \text { Cash } & & 74,500 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | r | r | } 
\hline \text { Salaries and Wages Expense } & 59,500 & \
\hline \text { Cash } & & 59,500 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 74,500 & \
\hline \text { Salaries and Wages Expense } & & 74,500 \
\hline
\end{array}$$

Question 9

On June 30,2019,Development Company purchased merchandise inventory for $500,000 by signing a six-month,8% note payable.Prepare the journal entry for the payment of the note on December 30,2019.Omit explanation.

Accepted Answer

\[\begin{array} { | l | r | r | } 
\hlin

Question 10

On September 1,2018,Tri-Cities Company borrowed $125,000 by signing a nine-month,7.2% note payable.Prepare the journal entry to accrue interest expense on December 31,2018.Omit explanation.

Accepted Answer

\[\begin{array} { | c | r | r

Question 11

Alpine Enterprises estimates that it will pay a 5% bonus on annual net income after deducting the bonus.The company reports net income of $500,000 before the calculation of the bonus.Employee Bonus Expense will be debited for $25,000.

Accepted Answer

A) True 
 B)False

Question 12

Vargas Company sold goods with a selling price of $50,000 in 2019 and estimated 5% warranty expense for the year.Customers complained of defects,and goods with a cost of $1500 had to be replaced.Which of the following is the correct journal entry for honoring the warranties with goods?

Accepted Answer

A)  $$\begin{array} { | c | l | l | } 
\hline \text { Estimated Warranty Payable } & 1500 & \
\hline \text { Cash } & & 1500 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | l | l | } 
\hline \text { Estimated Warranty Payable } & 1500 & \
\hline \text { Merchandise Inventory } & & 1500 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | l | l | } 
\hline \text { Warranty Expense } & 1500 & \
\hline \text { Merchandise Inventory } & & 1500 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | l | l | } 
\hline \text { Estimated Warranty Payable } & 1500 & \
\hline \text { Warranty Expense } & & 1500 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | c | l | l | } 
\hline \text { Estimated Warranty Payable } & 1500 & \
\hline \text { Cash } & & 1500 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | l | l | } 
\hline \text { Estimated Warranty Payable } & 1500 & \
\hline \text { Merchandise Inventory } & & 1500 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | l | l | } 
\hline \text { Warranty Expense } & 1500 & \
\hline \text { Merchandise Inventory } & & 1500 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | l | l | } 
\hline \text { Estimated Warranty Payable } & 1500 & \
\hline \text { Warranty Expense } & & 1500 \
\hline
\end{array}$$

Question 13

When a business records accrued interest expense on a note payable ________.

Accepted Answer

A)  Interest Expense is credited 
B)  Note Payable is credited 
C)  Cash is debited 
D)  Interest Payable is credited 
A)  Interest Expense is credited 
B)  Note Payable is credited 
C)  Cash is debited 
D)  Interest Payable is credited

Question 14

A contingency was evaluated at year-end.Management felt it was probable that this would become an actual liability and the amount could be reasonably estimated.If this is reported on the balance sheet,it could be considered a violation of generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 15

When a company co-signs a note payable for another entity,a current liability must be recorded.

Accepted Answer

A) True 
 B)False

Question 16

A contingency was evaluated at year-end and considered to have a reasonable possibility of becoming an actual liability.If this was not reported in the notes to the financial statements,what is the effect on the financial reporting of the company?

Accepted Answer

A)  There would be no effect. 
B)  The liabilities on the balance sheet would be understated. 
C)  The information about the transaction would be inadequately disclosed in the notes. 
D)  The net income of the company would be understated. 
A)  There would be no effect. 
B)  The liabilities on the balance sheet would be understated. 
C)  The information about the transaction would be inadequately disclosed in the notes. 
D)  The net income of the company would be understated.

Question 17

Jack's gross pay for the week is $1400.His year-to-date pay is under the limit for OASDI.Assume that the rate for state and federal unemployment compensation taxes is 6% and that Jack's year-to-date pay has previously exceeded the $7000 cap.What is the total amount of payroll taxes that Jack's employer must record as payroll tax expenses? (Do not round your intermediate calculations.Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%.)

Accepted Answer

A)  $86.80 
B)  $58.80 
C)  $20.30 
D)  $107.10 
A)  $86.80 
B)  $58.80 
C)  $20.30 
D)  $107.10

Question 18

Norwood Company signs a $11,000,8.5%,six-month note dated November 1,2018.The interest expense recorded for this note in 2018 will be ________.(Do not round any intermediate calculations,and round your final answer to the nearest dollar.)

Accepted Answer

A)  $935 
B)  $156 
C)  $468 
D)  $312 
A)  $935 
B)  $156 
C)  $468 
D)  $312

Question 19

On April 1,2019,Orbit Services received $8000 in advance of performing the services from a customer for three months of service - April,May and June.What would be the journal entry to adjust the accounts at the end of May? (Do not round any intermediate calculations,and round your final answer to the nearest dollar.)

Accepted Answer

A)  Debit Service Revenue $2667, and credit Unearned Revenue $2667. 
B)  Debit Unearned Revenue $5333, and credit Service Revenue $5333. 
C)  Debit Unearned Revenue $8000, and credit Service Revenue $8000. 
D)  Debit Service Revenue $5333, and credit Accounts Receivable $5333. 
A)  Debit Service Revenue $2667, and credit Unearned Revenue $2667. 
B)  Debit Unearned Revenue $5333, and credit Service Revenue $5333. 
C)  Debit Unearned Revenue $8000, and credit Service Revenue $8000. 
D)  Debit Service Revenue $5333, and credit Accounts Receivable $5333.

Question 20

Preston Sales,Inc.has gross salaries and wages for March of $45,000.Provide the journal entry to record salaries and wages expense and payroll withholdings.(Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%.)Salaries and wages to date are under the OASDI limit.Assume no federal or state income taxes are due.Salaries and wages will be paid at a later date.Omit explanation.

Accepted Answer

None

Exam 11: Current Liabilities and Payroll

The old age,survivors,and disability insurance component of FICA tax is imposed on the entire amount of an individual employee's earnings.

Which of the following accounting principles requires that warranty expense must be estimated and recognized in the same period when the related sales revenue is recognized?

Lana Appliances sells dishwashers with a four-year warranty.In 2018,sales revenue for dishwashers is $96,000.The company estimates warranty expense at 4.5% of revenues.What is the 2018 warranty expense? (Round your final answer to the nearest dollar.)

A $45,000,two-month,9% note payable was issued on December 1,2018.What is the amount of interest expense recorded in the year 2019? (Round the final calculation to the nearest dollar.)

When an employee takes a paid vacation,the Vacation Benefits Payable account will be decreased with a credit.

For the month of September,Seawide Sales Company recorded gross pay of $74,500.The net pay for the month amounted to $59,500.The salaries are paid on October 5.Which of the following is the journal entry for the payment of salaries?

On June 30,2019,Development Company purchased merchandise inventory for $500,000 by signing a six-month,8% note payable.Prepare the journal entry for the payment of the note on December 30,2019.Omit explanation.

On September 1,2018,Tri-Cities Company borrowed $125,000 by signing a nine-month,7.2% note payable.Prepare the journal entry to accrue interest expense on December 31,2018.Omit explanation.

Alpine Enterprises estimates that it will pay a 5% bonus on annual net income after deducting the bonus.The company reports net income of $500,000 before the calculation of the bonus.Employee Bonus Expense will be debited for $25,000.

Vargas Company sold goods with a selling price of $50,000 in 2019 and estimated 5% warranty expense for the year.Customers complained of defects,and goods with a cost of $1500 had to be replaced.Which of the following is the correct journal entry for honoring the warranties with goods?

When a business records accrued interest expense on a note payable ________.

A contingency was evaluated at year-end.Management felt it was probable that this would become an actual liability and the amount could be reasonably estimated.If this is reported on the balance sheet,it could be considered a violation of generally accepted accounting principles.

When a company co-signs a note payable for another entity,a current liability must be recorded.

A contingency was evaluated at year-end and considered to have a reasonable possibility of becoming an actual liability.If this was not reported in the notes to the financial statements,what is the effect on the financial reporting of the company?

Norwood Company signs a $11,000,8.5%,six-month note dated November 1,2018.The interest expense recorded for this note in 2018 will be ________.(Do not round any intermediate calculations,and round your final answer to the nearest dollar.)

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets,natural Resources,and Intangibles

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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