1) Deacon Company provides you with following information related to payroll
transactions for the month of May. Prepare journal entries to record the transactions for
May.
a. Recorded the May payroll using the payroll register information given above.
b. Recorded the employer’s payroll taxes resulting from the May payroll. The company
had a merit rating that reduces its state unemployment tax rate to 3.5% of the first
$7,000 paid each employee. Only $42,000 of the current months salaries are subject to
unemployment taxes. The federal rate is 0.6%.
c. Issued a check to Reliant Bank in payment of the May FICA and employee taxes.
d. Issued a check to the state for the payment of the SUTA taxes for the month of May.
e. Issued a check to Reliant Bank in payment of the employer’s quarterly FUTA taxes
for the first quarter in the amount of $1,020.
2) A company that reports segment information had average total assets of $1,522,450
and total net income of $590,700. Segment A had average total assets of $927,800 and
segment operating income of $298,300. Segment B had average assets of $594,650 and
segment operating income of $292,400. The segment return on assets for Segment A is:
A.60.9%.
B.32.2%.
C.50.5%.
D.38.8%.
E.49.2%.
3) Assume that a company uses special journals for sales, purchases, cash receipts, and
cash disbursements. A sales return for credit on account would be recorded in the:
A.Sales journal.
B.General journal.
C.Cash receipts journal.
D.Direct posting journal.
E.Cash disbursements journal.
4) Mace and Bowen are partners and share equally in income or loss. Mace’s current
capital balance is $135,000 and Bowen’s is $120,000. Mace and Bowen agree to accept
Kent with a 30% interest in the partnership. Kent invests $115,000 in the partnership.
The amount credited to Kent’s capital account is:
A.$111,000.
B.$115,000.
C.$92,500.
D.$120,000.
E.$119,000.
5) The following is taken from Clausen Company’s internal records of its factory with
two operating departments. The cost driver for indirect labor is direct labor hours, and
the cost driver for the remaining items is number of hours of machine use. Compute the
total amount of rent and utilities allocated to Dept. 2 using activity-based costing.
A.$6,000.
B.$13,134.
C.$8,566.
D.$14,092.
E.$14,152.
6) All of the following are true about debt securities except:
A.They can be short-term investments.
B.They can be long-term investments.
C.They can have a cost higher than the maturity value.
D.They can have a cost lower than the maturity value.
E. The reflect an owner relationship.
7) A company is considering the purchase of a new machine for $48,000. Management
predicts that the machine can produce sales of $16,000 each year for the next 10 years.
Expenses are expected to include direct materials, direct labor, and factory overhead
totaling $12,000 per year including depreciation of $3,000 per year. The company’s tax
rate is 40%. What is the payback period for the new machine?
A.20.0 years.
B.6.0 years.
C.7.5 years.
D.12.0 years.
E.8.9 years.
8) A seller (or provider) of goods or services to a business organization, usually a
manufacturer or wholesaler, is known as a:
A.Vendor.
B.Payee.
C.Vendee.
D.Creditor.
E.Debtor.
9) Grason Corporation is preparing a budgeted balance sheet for 2015. The retained
earnings balance at December 31, 2014 was $533,500. The 2015 budgeted income
statement shows expected net income of $112,000. The company expects to declare
dividends during 2015 amounting to $40,000. The expected balance in retained
earnings on the 2015 budgeted balance sheet is:
A.$533,500.
B.$605,500.
C.$645,500.
D.$493,500.
E.$685,500.
10) The process of restating future cash flows in today’s dollars is known as:
A.Budgeting.
B.Annualization.
C.Discounting.
D.Payback period.
E.Capitalizing.
11) The _______________________ protects stockholders’ proportional interest in a
corporation by allowing them to purchase their proportional share of any common stock
later issued by the corporation.
12) Identify the three basic forms of business organizations and their key attributes.
13) Johnnycake Restaurant uses a periodic inventory system. Prepare general journal
entries to record the following transactions for Johnnycake:
14) A company has three employees. Total salaries for the month of January were
$8,000. The federal income tax rate for all employees is 15%. The FICA€social security
tax rate is 6.2% and the FICA€Medicare tax rate is 1.45%. Calculate the amount of
employee taxes withheld and prepare the company’s journal entry to record the January
payroll assuming these were the only deductions.
15) Based on predicted production of 25,000 units, Marvel Mix Co. anticipates
$175,000 of variable costs and $137,500 of fixed costs. What are the flexible budget
amounts of total costs for 28,000 units?
16) Foreign exchange rates fluctuate due to changing _______________ and
___________ conditions.
17) What are methods that a company may use to retire its bonds?
18) Explain how equity securities having significant influence are accounted for and
reported in the financial statements. Include a discussion of the criterion for these
securities in terms of an investee’s voting stock.
19) Information to prepare the statement of cash flows usually comes from three
sources: (1) _______________, (2) _______________________, and (3)
____________________.
20) McClintock Co. had the following transactions involving plant assets during Year 1.
Unless otherwise indicated, all transactions were for cash.
Prepare the general journal entries to record these transactions.
