ACCT 211 Quiz 3 Accounting for Receivables, Long-Term Assets and Current Liabilities solution answer

ACCT 211 Quiz 3 Accounting for Receivables, Long-Term Assets and Current Liabilities solutions complete answers 

 

A company had the following accounts and amounts on December 31. Using this information, compute total assets for the company.
 

Cash
$ 15,000
Total equity
27,000
Accounts receivable
13,500
Services revenue
36,000
Equipment
19,500
Rent expense
6,000
Accounts payable
9,000
Wages expense
18,000
 

The expense recognition principle, also called the matching principle:

 

Which of the following decreases equity:

 

Prepaid expenses, depreciation expense, accrued expenses, unearned revenues, and accrued revenues are all examples of:

 

Identify the statement below that is true.

 

If cash is received from customers in payment for services that have not yet been performed, the business would record the cash receipt as:

 

Sales less sales discounts, less sales returns and allowances equals:

 

Using the following year-end information for Work-Fit calculate the acid-test ratio:
 

Cash
$ 51,900
Short-term investments
12,000
Accounts receivable (all current)
54,000
Inventory
325,000
Supplies
17,500
Accounts payable
106,500
Wages payable
24,500
 

Starlight Company has the following purchases and sales during October. Using the LIFO perpetual inventory method, what amount will be reported in cost of goods sold for the 11 units that were sold?
 

Date
Activities
Units Acquired at Cost
Units Sold at Retail
October 1
Beginning inventory
8 units @ $200 = $1,600
 
October 2
Purchase
20 units @ $205 = $4,100
 
October 4
Sales
 
 
 

Merchandise inventory includes:

 

Havermill Company establishes a $250 petty cash fund on September 1. On September 30, the fund is replenished. The accumulated receipts on that date represent $73 for Office Supplies, $137 for merchandise inventory, and $22 for miscellaneous expenses. The fund has a balance of $18. On October 1, the accountant determines that the fund should be increased by $50. The journal entry to record the establishment of the fund on September 1 is:

 

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
$ 354,000
debit
Net Sales
799,000
credit
 
All sales are made on credit. Based on past experience, the company estimates that 0.3% of net sales are uncollectible. What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared? 

 

Mullis Company sold merchandise on account to a customer for $965, terms n/30. The journal entry to record this sale transaction would be:

 

Jervis accepts all major bank credit cards, including those issued by Northern Bank (NB), which assesses a 4.0% charge on sales for using its card. On June 28, Jervis had $5,700 in NB Card credit sales. What entry should Jervis make on June 28 to record the deposit?

 

Defy Company makes a $77,000, 90-day, 12% cash loan to Ryan Company. The note and interest to be collected at maturity is: (Use 360 days a year.)

 

Giorgio Italian Market bought $9,600 worth of merchandise from Food Suppliers and signed a 45-day, 8% promissory note for the $9,600. Food Supplier's journal entry to record the sales transaction is:

 

Giorgio Italian Market bought $6,400 worth of merchandise from Food Suppliers and signed a 90-day, 6% promissory note for the $6,400. Food Supplier's journal entry to record the collection on the maturity date is: (Use 360 days a year.)

 

Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $3,300 uncollectible account of its customer, A. Hopkins. The entry or entries Gideon makes to record the write off of the account on May 3 is:

 

The formula for computing interest on a note is: Principal of the note × Annual interest rate × Time expressed in fraction of year.

 

Sellers can report credit card expense on the income statement as a discount subtracted from sales.

 

The maturity date of a note is the date the note (principal and interest) must be repaid.

 

Jervis accepts all major bank credit cards, including those issued by Northern Bank (NB), which assesses a 3% charge on sales for using its card. On June 28, Jervis had $3,500 in NB Card credit sales. What entry should Jervis make on June 28 to record the deposit?

 

A company borrowed $10,000 by signing a six-month promissory note at 5% interest. The amount of interest to be paid at maturity is $25.

 

 

A company purchased a tract of land for its natural resources at a cost of $1,981,300. It expects to mine 2,170,000 tons of ore from this land. The salvage value of the land is expected to be $267,000. The depletion expense per ton of ore is:

 

Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $146,000. The machine's useful life is estimated to be 10 years, or 120,000 units of product, with a $4,000 salvage value. During its second year, the machine produces 9,600 units of product. Determine the machines' second year depreciation under the straight-line method.

 

Mohr Company purchases a machine at the beginning of the year at a cost of $39,000. The machine is depreciated using the double-declining-balance method. The machine’s useful life is estimated to be 5 years with a $5,000 salvage value. The machine’s book value at the end of year 2 is:

 

Martin Company purchases a machine at the beginning of the year at a cost of $70,000. The machine is depreciated using the straight-line method. The machine’s useful life is estimated to be 4 years with a $4,000 salvage value. Depreciation expense in year 4 is:

 

Mohr Company purchases a machine at the beginning of the year at a cost of $25,000. The machine is depreciated using the straight-line method. The machine’s useful life is estimated to be 8 years with a $7,000 salvage value. Depreciation expense in year 2 is:

 

Nike owns equipment that cost $93,500 with accumulated depreciation of $64,000. Nike asks $35,000 for the equipment but sells the equipment for $33,000. Compute the amount of gain or loss on the sale.

 

Mohr Company purchases a machine at the beginning of the year at a cost of $44,000. The machine is depreciated using the units-of-production method. The company estimates it will use the machine for 5 years, during which time it anticipates producing 82,000 units. The machine is estimated to have a $3,000 salvage value. The company produces 10,700 units in year 1 and 7,700 units in year 2. Depreciation expense in year 2 is:

 

Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine’s useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. Determine the machine’s first year depreciation under the straight-line method.

 

A company purchased a delivery van for $28,000 with a salvage value of $3,000 on October 1, Year 1. It has an estimated useful life of 5 years. Using the straight-line method, how much depreciation expense should the company recognize on December 31, Year 1?

 

Betterments:

 

The formula to compute annual straight-line depreciation is:

 

The cost of land would not include:

 

During the first week of January, an employee works 47 hours. For this company, workers earn 150% of their regular rate for hours in excess of 40 per week. Her pay rate is $15 per hour, and her wages are subject to no deductions other than Federal Insurance Contributions Act (FICA) Social Security, Federal Insurance Contributions Act (FICA) Medicare, and federal income taxes. The tax rate for Social Security is 6.2% of the first $137,700 earned each calendar year and the Federal Insurance Contributions Act (FICA) tax rate for Medicare is 1.45% of all earnings. The current Federal Unemployment Taxes (FUTA) tax rate is 0.6%, and the State Unemployment Taxes (SUTA) tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee’s pay. The employee has $81 in federal income taxes withheld. What is the amount of this employee’s net pay for the first week of January? (Round your intermediate calculations to two decimal places.)

 

A company had interest expense of $7,500, income before interest expense and income taxes of $19,000, and net income of $9,400. The company's times interest earned ratio equals:

 

On November 1, Alan Company signed a 120-day, 10% note payable, with a face value of $22,500. What is the adjusting entry for the accrued interest at December 31 on the note? (Use 360 days a year.)

 

On April 12, Hong Company agrees to accept a 60-day, 10%, $6,300 note from Indigo Company to extend the due date on an overdue account payable. What is the journal entry made by Indigo Company to record the transaction?

 

The current Federal Unemployment Taxes (FUTA) tax rate is 0.6%, and the State Unemployment Taxes (SUTA) tax rate is 5.4%. Both taxes are applied to the first $7,000 of an employee's pay. Assume that an employee earned total wages of $11,300. What is the amount of total unemployment taxes the employer must pay on this employee's wages?

 

The current Federal Unemployment Taxes (FUTA) tax rate is 0.6%, and the State Unemployment Taxes (SUTA) tax rate is 5.4%. Both taxes are applied to the first $7,000 of an employee's pay. Assume that an employee earned total wages of $9,900. What is the amount of total unemployment taxes the employer must pay on this employee's wages?

 

Which of the following statements regarding Federal Insurance Contributions Act (FICA) taxes is false?

 

On November 1, Alan Company signed a 120-day, 11% note payable, with a face value of $14,400. What is the maturity value (principal plus interest) of the note on March 1? (Use 360 days a year.)

 

Short-term notes payable:

 

The amount of federal income tax withheld from employee pay depends on the employee’s income and the number of withholding allowances the employee claims.

 

When a note is issued in one period but paid during the next period, interest expense should not be accrued until the note is paid.

 

The future value of an ordinary annuity is the accumulated value of each annuity payment excluding interest as of the date of the final payment.

 

The present value factor for determining the present value of $6,300 to be received three years from today at 10% interest compounded semiannually is 0.7462. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

 

The rate that a state assigns based on a company’s stability in employing workers is the: