$100,000; and Medicare tax rate, 1.5% on all earnings. What is the gross pay for the employee?

Transcription

1 Final Exam Review 1. Accumulated Depreciation a. is used to show the amount of cost expiration of intangibles b. is the same as Depreciation Expense c. is a contra asset account d. is used to show the amount of cost expiration of natural resources 2. A machine with a cost of $110,000 has an estimated residual value of $10,000 and an estimated life of 10 years or 20,000 hours. It is to be depreciated by the units-of-production method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours? 3. A machine with a cost of $200,000 has an estimated residual value of $5,000 and an estimated life of 5 years or 18,000 hours. What is the amount of depreciation for the second full year, using the double decliningbalance method? 4. If a fixed asset, such as a computer, were purchased on January 1st for $6,150 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation is: 5. Computer equipment was acquired at the beginning of the year at a cost of $75,000 that has an estimated residual value of $5,000 and an estimated useful life of 5 years. Determine the 2nd year s depreciation using straight-line depreciation. 6. An asset was purchased for $150,000 and originally estimated to have a useful life of 10 years with a residual value of $10,000. After three years of straight line depreciation, it was determined that the remaining useful life of the asset was only 4 years with a residual value of $8,000. Calculate this year s depreciation using the revised amounts and straight line method. 7. A fixed asset with a cost of $40,000 and accumulated depreciation of $38,500 is sold for $3,700. What is the amount of the gain or loss on disposal of the fixed asset?

2 8. On December 31, Strike Company has decided to discard one of its batting cages. The initial cost of the equipment was $325,000 with an accumulated depreciation of $200,000. Depreciation has been taken up to the end of the year. Record the journal entry for the disposal. 9. Grayson Bank agrees to lend the Trust Company $200,000 on January 1. Trust Company signs a $200,000, 12%, 8-month note. What entry will Trust Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30? Debit Interest Payable rather than interest expense here. 10. When a $40,000, 90-day, 8% interest-bearing note payable matures, total payment will amount to: 11. On October 30, Seba Salon, Inc. issued a 90-day note with a face amount of $90,000 to Reyes Products, Inc. for merchandise inventory. Determine the proceeds of the note assuming the note is discounted at 7%. 12. An employee receives an hourly rate of $30, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $250; cumulative earnings for year prior to current week, $99,700; social security tax rate, 6.0% on maximum of $100,000; and Medicare tax rate, 1.5% on all earnings. What is the gross pay for the employee? 13. An employee receives an hourly rate of $24, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 46 federal income tax withheld, $330; cumulative earnings for year prior to current week, $99,700; social security tax rate, 6.0% on maximum of $100,000; and Medicare tax rate, 1.5% on all earnings. What is the net amount to be paid the employee? 14. An employee receives an hourly rate of $35, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $400; cumulative earnings for year prior to current week, $90,700; social security tax rate, 6.0% on maximum of $100,000; and Medicare tax rate, 1.5% on all earnings. What is the net amount to be paid the employee? 15. Which of the following are included in the employer's payroll taxes? a. SUTA taxes b. FUTA taxes c. FICA taxes d. all of the above 16. An employee receives an hourly rate of $15, with time and a half for all hours worked in excess of 40 during the week. Payroll data for the current week are as follows: hours worked, 48; federal income tax withheld, $120; cumulative earnings for the year prior to this week, $24,500; Social security tax rate, 6% on maximum of $100,000; and Medicare tax rate, 1.5% on all earnings; state unemployment compensation tax, 3.4% on the first $7,000; federal unemployment compensation tax,.8% on the first $7,000. What is the net amount to be paid the employee?

3 17. The assets and liabilities of the company are $185,000 and $50,000, respectively. Stockholders equity should equal 18. If total assets decreased by $78,000 during a period of time and stockholders equity increased by $55,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total liabilities is 19. Land, originally purchased for $35,000, is sold for $95,000 in cash. What is the effect of the sale on the accounting equation? 20. Prarie Clinic purchased X-ray equipment for $5,000, paid $2,275 down, with the remainder to be paid later on account. The correct entry would be: 21. May 24 Land 53,000 Cash 53,000 Purchased land for business What effects does this journal entry have on the two accounts? 22. What entry records the acquisition of office supplies on account? 23. Which of the following is true about a T-Account? a. Left hand side of the T-Account is called a debit. b. Left hand side of the T-Accounts is called a credit c. Right hand side of the T-Account is called a debit d. None are true. 24. The balance in the prepaid rent account before adjustment at the end of the year is $40,000, which represents 8 months' rent paid on December 1. The adjusting entry required on December 31 is

4 25. A business pays weekly salaries of $40,000 on Friday for a five-day week ending on that day. The adjusting entry necessary for the business at the end of the fiscal period ending on Tuesday is 26. Carithers Cleaning Service received advance payments from customers during 2013 of $37,000. At December 31, 2013, $7,000 of the advance payments still had not been earned. After the adjustments are recorded and posted at December 31, 2013, the balances in the Unearned Service Revenue and Service Revenue accounts will be: 27. The asset account, Supplies, has a balance of $9,000 on January 1. During January, $32,000 of supplies were purchased on account and the liability was appropriately recorded. A count of supplies at the end of January indicates a balance of $4,000. What adjusting entry is necessary at January 31? 28. The journal entry to close the Fees Earned, $475, and Rent Revenue, $930, accounts on December 31st during the closing process would be: 29. Using the following information, what is the amount of net sales? Purchases $32,000 Purchases discounts $960 Merchandise inventory 5,700 Merchandise inventory 6,370 September 1 September 30 Sales returns and 1,500 Sales 80,000 allowances Purchases returns and allowances 1,200 Freight In 1, Merchandise with an invoice price of $6,000 is purchased on September 2 subject to terms of 3/10, n/30, FOB destination. Freight costs paid by the seller totaled $200. What is the cost of the merchandise if paid on September 12, assuming the discount is taken?

5 31. Cumberland Co. sells $3,500 of inventory to Hancock Co.for cash. Cumberland paid $1,550 for the merchandise. Under a perpetual inventory system, which of the following journal entry(ies) would be recorded? 32. The Corbit Corp. sold merchandise for cash, $8,200. The cost of the merchandise sold was $4,950. The journal entry(s) to record this transaction would be 33. Carolina Truck Lines purchased a truck at a cost of $32,000 in As of January 1, 2013, depreciation of $19,000 had been recorded on this asset. Depreciation expense for 2013 is $3,000. Before the adjustments are recorded and posted at December 31, 2013, what is the truck s book value? a. $22,000 b. $18,000 c. $4,000 d. $2,000

6 Use the following information in the adjusted trial balance for Stockton Company to answer the next five questions. Stockton Company Adjusted Trial Balance For the Year ended December 31, 2010 Cash $12,865 Accounts Receivable 4,100 Prepaid Expenses 1700 Equipment 12,700 Accumulated Depreciation $4,100 Accounts Payable 1,900 Notes Payable 4,200 Capital Stock 12,940 Dividends 790 Fees Earned 15,750 Wages Expense 3,500 Rent Expense 2,000 Utilities Expense 885 Depreciation Expense 250 Miscellaneous Expense 100 Totals $38,890 $38, Determine the net income (loss) for the period. 35. Determine the stockholders equity ending balance for the period. 36. Determine total assets.

7 37. Determine the current assets. 38. Determine the total liabilities for the period. 39. The inventory data for an item for September are: Sep. 1 Inventory 20 units at $18 4 Sold 10 units 10 Purchased 30 units at $22 17 Sold 20 units 30 Purchased 10 units at $24 Using the perpetual system, costing by the last-in, first-out method, what is the cost of the merchandise sold for September? 40. Beginning inventory, purchases and sales data for tennis rackets are as follows:

8 Apr 3 Inventory 12 $42 11 Purchase 13 $45 14 Sale 18 units 21 Purchase 9 $50 25 Sale 10 units Assuming the business maintains a perpetual inventory system, calculate the cost of merchandise sold and ending inventory under First-in, first-out: 41. Beginning inventory, purchases and sales data for tennis rackets are as follows: Apr 3 Inventory 12 $24 11 Purchase 13 $26 14 Sale 18 units 21 Purchase 9 $31 25 Sale 10 units Assuming the business maintains a perpetual inventory system, calculate the cost of merchandise sold and ending inventory under Last-in, first-out: 42. Meredith Company gathered the following reconciling information in preparing its May bank reconciliation: Cash balance per books, 5/31 $4,500 Deposits in transit 150 Notes receivable and interest collected by bank 800 Bank charge for check printing 50 Outstanding checks 1,800 NSF check 200 The adjusted cash balance per books on May 31 is 43. Which of the following would be added to the balance per books on a bank reconciliation?

9 a. Service charges b. Outstanding checks c. Deposits in transit d. Notes collected by the bank 44. Accompanying the bank statement was a debit memo for bank service charges. What entry is required in the company's accounts? a. debit Miscellaneous Administrative Expense; credit Cash b. debit Cash; credit Other Income c. debit Cash; credit Accounts Payable d. debit Accounts Payable; credit Cash 45. The amount of deposits in transit is included on the bank reconciliation as a. deduction from the balance per the company's books b. deduction from the balance per bank statement c. addition to the balance per bank statement d. addition to the balance per company books 46. Allowance for Doubtful Accounts has a credit balance of $600 at the end of the year (before adjustment), and uncollectible accounts expense is estimated at 3.5% of net sales. If net sales are $850,000, the amount of the adjusting entry to record the provision for doubtful accounts is 47. An estimate based on an analysis of receivables shows that $855 of accounts receivables are uncollectible. The Allowance for Doubtful Accounts has a debit balance of $220. The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of: 48. Allowance for Doubtful Accounts has a credit balance of $600 at the end of the year (before adjustment), and an analysis of accounts in the customers ledger indicates doubtful accounts of $18,000. Which of the following entries records the proper provision for doubtful accounts? 49. Allowance for Doubtful Accounts has a debit balance of $2,100 at the end of the year (before adjustment), and an analysis of customers' accounts indicates doubtful accounts of $15,900. Which of the following entries records the proper provision for doubtful accounts? 50. Allowance for Doubtful Accounts has a debit balance of $500 at the end of the year (before adjustment), and uncollectible accounts expense is estimated at 5% of net sales. If net sales are $400,000, the amount of the adjusting entry to record the provision for doubtful accounts is

10