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PART 2 :
QUESTIONS : Q26 TO Q50 :
26.
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$ 6,270
Deposits in transit at month-end$ 1,310
Outstanding checks at month-end$ 630
Bank charge for printing new checks $ 50
Note receivable and interest collected by bank on Marks’ behalf $ 760
A check given to Marks during the month by a customer is returned
by the bank as NSF$ 490
The adjusted cash balance per the books on September 30 is:
$6,980
$6,490
$4,550
$5,830
$8,150
27.
On December 31 of the current year, a company’s unadjusted trial balance included the following: Accounts Receivable, debit balance of $97,900; Allowance for Doubtful Accounts, credit balance of
$1,031.
What amount should be debited to Bad Debts Expense, assuming 6% of outstanding accounts receivable at the end of the current year will be uncollectible?
$4,843.
$1,031.
$6,905.
$5,874.
$3,951.
28.
A company has $102,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 6% of outstanding receivables are uncollectible. The current debit balance (before adjustments) in the allowance for doubtful accounts is
$920
. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:
$5,200
$6,120
$7,040
$920
None of these
29.
A company that uses the net method of recording invoices made a purchase of $900 with terms of 3/10, n/30. The entry to record the purchase would include:
A credit to Cash for $873.
A debit to Cash for $873.
A credit to Discounts Lost for $27.
A debit to Merchandise Inventory for $873.
A debit to Discounts Lost for $27.
30.
The interest accrued on $5,500 at 8% for 45 days is (Use 360 days a year. Do not round intermediate calculations):
$44.
$51.
$220.
$513.
$55.
31.
Marble Company purchased a machine costing $134,000, terms 3/10, n/30. The machine was shipped FOB shipping point and freight charges were $3,400. The machine requires special mounting and wiring connections costing $11,400. When installing the machine, $2,700 in damages occurred. Materials costing $2,900 are used in testing and adjusting the machine to produce a satisfactory product. Compute the cost recorded for this machine assuming Marble paid within the discount period.
$144,280.
$150,380.
$144,980.
$147,680.
$154,400.
32.
An employee earned $45,600 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:
$3,488.40.
$6,976.80.
$661.20.
Zero, since the employee’s pay exceeds the FICA limit.
$2,827.20.
33.
|
During August, Arena Company sells $363,000 in product that has a one year warranty. Experience shows that warranty expenses average about 4% of the selling price. The warranty liability account has a balance of $13,500 before adjustment. Customers returned product for warranty repairs during the month that used $10,100 in parts for repairs. The entry to record the customer warranty repairs is: |
|
Debit Estimated Warranty Liability $10,100; credit Parts Inventory $10,100. |
|
Debit Warranty Expense $14,520; credit Estimated Warranty Liability $14,520. |
|
Debit Estimated Warranty Liability $14,520; credit Parts Inventory $14,520. |
|
Debit Warranty Expense $10,100; credit Estimated Warranty Liability $10,100. |
|
Debit Warranty Expense $11,120; credit Estimated Warranty Liability $11,120.
|
34.
Arena Company provides health insurance to its employees that costs $14,400 per month. In addition, the company contributes 4% of the employees’ $144,000 gross salary to a retirement program. The entry to record the accrued benefits for the month would include a:
Debit to Employee Retirement Program Payable $5,760.
Credit to Employee Benefits Expense $20,160.
Credit to Employee Benefits Expense $14,400.
Debit to Medical Insurance Payable $14,400.
Debit to Employee Benefits Expense $20,160.
35.
When originally purchased, a vehicle had an estimated useful life of 8 years. The vehicle cost $25,560 and its estimated salvage value is $3,000. After 4 years of straight-line depreciation, the asset’s total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value. The depreciation expense in year 5 equals:
$2,820.00.
$5,640.00.
$2,988.00.
$5,808.00.
$11,280.00.
36.
Cambria owns equipment that cost $95,300 with accumulated depreciation of $65,200. Cambria asks $35,450 for the equipment but sells the equipment for $33,300. Compute the amount of gain or loss on the sale.
$5,350 gain.
$3,200 loss.
$2,150 gain.
$5,350 loss.
$3,200 gain.
37.
Harvel Company is required by law to collect and remit sales taxes to the state. If Havel has $8,500 of cash sales that are subject to an 7% sales tax, what is the journal entry to record the cash sales?
Debit Cash $9,095; credit Sales $8,500; credit Sales Taxes Payable $595.
Debit Accounts Receivable $9,095; credit Sales $8,500; credit Sales Taxes Payable $595.
Debit Cash $8,500; credit Sales $8,500; and record the sales tax when paid.
Debit Cash $8,500; credit Sales $7,905; credit Sales Taxes Payable $595.
Debit Sales Taxes Payable $595; debit Cash $7,905; credit Sales $8,500.
38.
On November 1, Carter Company signed a 120-day, 10% note payable, with a face value of $18,000. What is the adjusting entry for the accrued interest at December 31 on the note? (Use 360 days a year.)
No journal entry required.
Debit interest expense, $200; credit interest payable, $200.
Debit interest expense, $300; credit interest payable, $300.
Debit interest expense, $400; credit interest payable, $400.
Debit interest expense, $600; credit interest payable, $600.
39.
The following information is available on a depreciable asset owned by First Bank & Trust:
Purchase date October 1, Year 1
Purchase price $122,100
Salvage value $11,700
Useful life 12 years
Depreciation method straight-line
The asset’s book value is $103,700 on October 1, Year 3. On that date, management determines that the asset’s salvage value should be $6,700 rather than the original estimate of $11,700. Based on this information, the amount of depreciation expense the company should recognize during the last three months of Year 3 would be (Do not round intermediate calculations. Round your final answer to two decimal places):
$2,358.04
$2,715.18
$2,132.50
$2,592.50
$2,425.00
40.
A company purchased property for
$100,000.
The property included a building, a parking lot, and land. The building was appraised at $56,000; the land at $49,800, and the parking lot at $19,200. Land should be recorded in the accounting records with an allocated cost of (Do not round intermediate calculations):
$49,800.
$100,000.
$45,840.
$12.
$39,840.
41.
A corporation had 13,500 shares of $5 par value common stock outstanding when the board of directors declared a stock dividend of 4,995 shares. At the time of the stock dividend, the market value per share was $19. The entry to record this dividend is:
Debit Common Stock Dividend Distributable $94,905; credit Retained Earnings $94,905.
Debit Retained Earnings $94,905; credit Common Stock Dividend Distributable $24,975; credit Paid-In Capital in Excess of Par Value, Common Stock $69,930.
Debit Retained Earnings $94,905; credit Common Stock Dividend Distributable $94,905.
Debit Retained Earnings $24,975; credit Common Stock Dividend Distributable $24,975.
No entry is needed.
42.
A company has 2,500 shares of $100 par preferred stock. It also has 20,000 shares of common stock outstanding, and its total stockholders’ equity equals $600,000. The book value per common share is:
$17.50.
$30.00.
$15.56.
$26.67.
$100.00.
43.
Shamrock Company had net income of $33,580. The weighted-average common shares outstanding were 9,200. The company sold 4,200 shares before the end of the year. There were no other stock transactions. The company’s earnings per share is:
$33.58.
$2.51.
$8.00.
$6.72.
$3.65.
44.
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 $140,000, Wesson contributed $84,000 and Davis contributed $28,000. In the partnership’s first year of operation, it incurred a loss of $247,500. 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.)
$82,500
$123,750
$61,875
$137,500
$27,500
45.
Badger and Fox are forming a partnership. Badger contributes a building that has a market value of $332,000; the partnership assumes responsibility for a $116,000 note secured by a mortgage on the property. Fox invests $91,000 in cash and equipment that has a market value of $66,000. For the partnership, the amounts recorded for total assets and for total capital account are:
Total assets $373,000; total capital $373,000.
Total assets $489,000; total capital $373,000.
Total assets $605,000; total capital $605,000.
Total assets $489,000; total capital $489,000.
Total assets $373,000; total capital $489,000.
46.
Smith, West, and Krug form a partnership. Smith contributes $204,000, West contributes $170,000, and Krug contributes $306,000. Their partnership agreement calls for a 6% interest allowance on the partner’s capital balances with the remaining income or loss to be allocated equally. If the partnership reports income of $208,800 for its first year, what amount of income is credited to Krug’s capital account?
$56,000.
$68,240.
$69,600.
$74,360.
$66,200.
47.
A corporation declared and issued a 5% stock dividend on November 1. The following information was available immediately prior to the dividend:
Retained earnings $710,000
Shares issued and outstanding 56,000
Market value per share $19
Par value per share $5
The amount that contributed capital will increase (decrease) as a result of recording this stock dividend is:
$0.
$53,200.
$(14,000).
$(53,200).
$14,000.
48.
Smith, West, and Krug form a partnership. Smith contributes $198,000, West contributes $165,000, and Krug contributes $297,000. 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 $167,000 for its first year, what amount of income is credited to Smith’s capital account? (Do not round your intermediate calculations.)
$55,667.
$75,150.
$57,600.
$41,750.
$50,100.
49.
The following data were reported by a corporation:
Authorized shares40,000
Issued shares35,000
Treasury shares13,500
The number of outstanding shares is:
26,500.
35,000.
53,500.
40,000.
21,500.
50.
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 balances are Mack, $15,400, Harris, $15,400, Huss, $(2,400). After all the assets are sold and liabilities are paid, but before any contributions to cover any deficiencies, there is $28,400 in cash to be distributed. Huss pays $2,400 to cover the deficiency in his account. The general journal entry to record the final distribution would be:
Debit Cash $28,400; debit Huss, Capital $2,400; credit Mack, Capital $15,400; credit Harris, Capital $15,400.
Debit Mack, Capital $15,400; debit Harris, Capital $15,400; credit Cash $30,800.
Debit Mack, Capital $15,400; debit Harris, Capital $15,400; credit Huss, Capital $2,400; credit Cash $28,400.
Debit Mack, Capital $9,466; debit Harris, Capital $9,467; debit Huss, Capital $9,467; credit Cash $28,400.
Debit Mack, Capital $14,200; debit Harris, Capital $14,200; credit Cash $28,400.
