A company has four departments (A, B, C and D) and the net sales are $35,000;
$40,000; $60,000 and $25,000 respectively. The cost of goods sold per department is
$25,000; $15,000; $30,000 and $15,000 respectively. What department has the highest
gross profit?
A) A
B) B
C) C
D) D
The number of allowances claimed by an employee determines how much will be
withheld from their paycheck for:
A) FICA-OASDI.
B) FICA-Medicare.
C) federal income tax.
D) both A and B are correct.
Complete the following questions based on the journal entry below:
GENERAL JOURNAL Page 1
a) Date of Journal entry: ___________
b) Name of account debited: ___________
c) Name of account credited: ___________
d) Provide an explanation for this entry: ___________
e) Page of Journal: ___________
f) Account number for Cash: ___________
g) Account number for Accounts Receivable: ___________
The payroll taxes the employer is responsible for are:
A) FICA-OASDI.
B) FICA-Medicare.
C) State income taxes.
D) A and B.
Bob Stein’s hourly wage is $45.00, and he worked 42 hours during the week. Assuming
an overtime rate of time and a half over 40 hours, Bob’s gross pay is:
A) $1,935.
B) $1,720.
C) $2,580.
D) $1,600.
The following data are available for Convoy Trucks:
Estimated machine hours 40,000 hours
Actual machine hours 5,000 hours
Estimated manufacturing overhead costs $150,000
Actual manufacturing overhead costs 13,000
Required:
a. Compute the predetermined overhead rate assuming the rate is based on machine
hours.
b. Prepare the journal entry to record the applied overhead.
All of the following are used to compute gross profit except:
A) sales.
B) purchase returns and allowances.
C) rent expense.
D) purchases.
To record the purchase of treasury stock:
A) debit Treasury Stock-Common (par value); credit Cash (same).
B) debit Treasury Stock-Common (purchase price); credit Cash (same).
C) debit Treasury Stock-Common (par value); debit any difference to Paid-in Capital;
credit Cash (purchase price).
D) None of these answers is correct.
Joyful Praises Corporation has total advertising expenses of $84,000: $32,000 for radio
advertising and $52,000 for print advertising. The print advertising is allocated to
Departments A and B based on net sales generated in each department. Department A
has net sales of $446,400 and Department B has net sales of $297,600. How much of
the print advertising should be allocated to Department A?
A) $13,000
B) $39,000
C) $52,000
D) $31,200
The journal entry to establish a bond sinking fund would include:
A) a credit to Bond Sinking Fund.
B) a debit to Bonds Payable.
C) a debit to Bond Sinking Fund.
D) a credit to Bonds Payable.
Which of the following accounts would most likely be debited in the replenishment of
petty cash?
A) Cash
B) Petty Cash
C) Postage Expense
D) Withdrawals
Topiary’s Unlimited has a cost of goods sold of $1,400,000. The beginning merchandise
inventory was $195,000 and its ending merchandise inventory is $205,000. Topiary’s
merchandise inventory turnover ratio is:
A) 8.50 times.
B) 7.00 times.
C) 8.00 times.
D) None of the above is correct.
In the statement of cash flows (indirect method), which event would cause net income
to be increased?
A) An increase in Inventory
B) A decrease in Prepaid Insurance
C) A decrease in Accounts Payable
D) An increase in Accounts Receivable
The adjusted trial balance on the worksheet:
A) contains balances from the permanent accounts.
B) contains balances from the temporary accounts.
C) contains balances for all accounts with balances.
D) contains balances for accounts not requiring adjustments.
A manufacturing company will have a new set of columns on the worksheet for the:
A) statement of finished goods.
B) statement of work-in-process inventories.
C) statement of cost of goods sold.
D) statement of cost of goods manufactured.
Generally Accepted Accounting Principles prefer which method of computing cash
flow from operating activities?
A) Combination method
B) Direct method
C) Indirect method
D) Adjusting method
Which of the following decrease when treasury stock is purchased?
A) Issued shares
B) Outstanding shares
C) Authorized shares
D) None of these answers is correct.
To record accrued salaries, you would:
A) debit Cash and credit Salaries Payable.
B) debit Salaries Payable and credit Salaries Expense.
C) debit Salaries Expense and credit Salaries Payable.
D) debit Salaries Expense and credit Cash.
Mark paid $500 cash to partially reduce the amount owed for equipment that was
previously bought on account. This transaction would:
A) increase both assets and liabilities.
B) increase assets and decrease liabilities.
C) decrease both assets and liabilities.
D) decrease assets and increase liabilities.
When recording a bonus to a new partner, the new partner will:
A) pay more than what the new partner’s capital account will reflect.
B) pay the same as the other partners’ capital accounts.
C) pay less than the new partner will receive in the capital account.
D) have no bonus recorded as a bonus cannot be paid to new partners.
The sales of Mary’s Services for Years 1, 2, and 3 are $25,000, $45,000, $60,000,
respectively. The trend percentage for Year 3 is:
A) 42%.
B) 240%.
C) 180%.
D) 58%.
What is the closing entry to allocate net income $30,000 to Eric, Von, and Derek? Their
respective capital balances are $20,000, $40,000, and $60,000. Net income is shared in
a ratio of their capital balances.
A) Debit Income Summary $30,000; credit Eric, Capital $5,000; credit Von, Capital
10,000; credit Derek, Capital $15,000
B) Debit Income Summary $30,000; credit Eric, Capital $10,000; credit Von, Capital
$10,000; credit Derek, Capital $10,000
C) Debit Salary Expense $30,000; credit Salaries Payable $30,000
D) Net income cannot be allocated.
The adjustment for accrued wages was NOT done; this would cause:
A) liabilities to be overstated.
B) liabilities to be understated.
C) capital to be understated.
D) net income to be understated.
A depreciation method that allocates depreciation of a plant asset based on the Tax Act
of 1989 is the:
A) straight-line method.
B) units-of-production method.
C) modified accelerated cost recovery method.
D) double declining-balance method.
The income statement is prepared from the:
A) Post-Closing Trial Balance.
B) worksheet.
C) general journal.
D) statement of owner’s equity.
Mike returned $200 of merchandise to Secret Trails. His original purchase was Mike
400, with terms 1/10, n/30. If Justin pays the balance of his account after the discount
period, how much should he pay?
A) $204.00
B) $196.00
C) $200.00
D) $400.00
Which of the following is the journal entry to record the declaration of a stock
dividend?
A) Debit Common Stock Dividend Distributable (number of shares par value common
stock); credit Common Stock (same)
B) Debit Common Stock Dividend Distributable (number of shares market value
common stock); credit Common Stock (same)
C) Debit Retained Earnings (market value number of shares); credit Common Stock
Dividend Distributable (number of shares par value); credit Paid-In Capital in Excess of
Par Value Stock Dividend (market value – par value) number of shares
D) Debit Common Stock (number of shares par value); credit Cash
If a bond is issued at a discount, the effective interest rate is most likely ________ the
contract interest rate.
A) higher than
B) lower than
C) the same as
D) Cannot be determined based on information given.
Merchandise purchased for resale under the periodic inventory method is added to:
A) Merchandise Inventory.
B) Supplies.
C) Purchases.
D) Inventory Expense.
If the Supplies account is NOT adjusted:
A) assets will be overstated and expenses will be understated.
B) assets will be overstated and expenses will be overstated.
C) assets will be understated and expenses will be overstated.
D) assets will be understated and expenses will be understated.
The income statement columns on a worksheet have subtotals as follows: debit column,
$12,000, and credit column, $9,000. This indicates that:
A) the company incurred a net loss of $3,000.
B) the company earned a net income of $1,500.
C) there was an error in the unadjusted trial balance columns.
D) there was an error in the income statement columns.
On July 1, Hill’s Construction paid six months’ insurance in advance. The journal entry
to record this transaction is:
A) Debit Prepaid Insurance; Credit Cash
B) Debit Insurance Expense; Credit Cash
C) Debit Cash; Credit Prepaid Insurance
D) Debit Cash; Credit Insurance Expense
After the closing entries have been posted:
A) the temporary accounts are zeroed out.
B) the Capital account includes the current net profit or loss.
C) the post-closing trial balance is prepared.
D) All of these answers are correct.
A blank endorsement on a check:
A) can be further endorsed by someone else.
B) cannot be further endorsed by someone else.
C) is the safest type of endorsement.
D) permits only the original endorser to get the money.
Given the following payroll items you are to identify whether they are the responsibility
of the employer and/or the employee by placing an X in the appropriate column.
Determine the ending Capital balance of a business having:
Beginning Capital of $50,000
No investments or withdrawals
Beginning inventory of $10,000
Net Purchases of $90,000
Ending inventory of $12,000
Operating expenses of $72,000
Net sales $190,000
$ ________
Given the following accounts:
[1] Cash
[2] Accounts receivable
[3] Merchandise inventory
[4] Supplies
[5] Accounts payable
[6] Sales
[7] Sales returns and allowances
[8] Sales discounts
[9] Cost of goods sold
[10] Purchases
[11] Purchase returns and allowances
[12] Purchase discounts
[13] Freight-in
Indicate the account(s) to be debited and credited to record the following transactions.
Paid for merchandise within the discount period. – Perpetual
Debit ________ Credit ________ & ________
The following data applies to the July 15 payroll for the Woodard Research Firm
(overtime is paid at 1 1/2)
Assume:
FICA-OASDI is 6.2% based on a limit of $117,000.
FICA-Medicare is 1.45%.
FUTA is .8% based on a limit of $7,000.
SUTA is 5.6% based on a limit of $7,000.
State income tax is 2.8%.
Compute the total federal income tax.
Prepare the following stock dividend journal entries for Tamera, Inc.
June 19 Declared a 6% stock dividend to common stockholders. The stock has a par
value of $13 and a current market value of $14. There are 60,000 shares of
common stock outstanding.
July 2 The stock dividend is issued.
Compare and discuss a discount period versus a credit period.
What are interim financial statements?
Common Stock, $5 par value, 5,000 shares issuedand
outstanding $25,000Retained
Earnings 20,000 Total
Stockholders’ Equity $45,000Prepare journal entries
for the following transactions:May 3 Issued 500 shares at $6 per share.
9 Reacquired 100 shares at $4 per share. 15 Reissued 50 of the Treasury
shares at $7 per share. 17 Reissued 10 of the Treasury shares at $3 per share.
Using the following accounts:
[1] Cash
[2] Dividends payable
[3] Preferred stock
[4] Common stock
[5] Common Stock dividend distributable
[6] Paid-in capital in excess of par value-common
[7] Paid-in capital in excess of par value – preferred
[8] Paid-in capital from treasury stock
[9] Retained earnings
[10] Appropriation for plant expansion
[11] Treasury stock
[12] Income summary
[13] Paid-in capital in excess of par value-Stock dividend
Indicate the account(s) to be debited and credited to record the following transactions.
Sold treasury stock at a price equal to cost.
Debit ________ & Credit ________
Given the following accounts:
[1] Cash
[2] Accounts receivable
[3] Merchandise inventory
[4] Supplies
[5] Accounts payable
[6] Sales
[7] Sales returns and allowances
[8] Sales discounts
[9] Cost of goods sold
[10] Purchases
[11] Purchase returns and allowances
[12] Purchase discounts
[13] Freight-in
Indicate the account(s) to be debited and credited to record the following transactions.
Purchased merchandise with cash; terms of 2/10, n/30. – Perpetual
Debit ________ Credit ________
Given the following accounts:
[1] Expense accounts.
[2] Accounts receivable
[3] Finished goods inventory.
[4] Work in process inventory.
[5] Raw materials inventory.
[6] Factory supplies inventory.
[7] Manufacturing overhead applied
[8] Depreciation expense
[9] Accounts payable.
[10] Payroll
[11] Utilities expense
[12] Sales.
[13] Raw materials purchases.
[14] Manufacturing overhead-control.
[15] Cost of goods sold.
Indicate the account(s) to be debited and credited to record the following transactions.
Charged the following costs to overhead: utilities, salaries, and depreciation.
Debit ________ Credit ________ & ________ & ________
Crane Printing purchased $7,000 of supplies from Paper Wholesale, terms 2/10, n/30 on
July 25, and prepared voucher #611. Crane paid the voucher on July 31.
Required: Prepare journal entries to record the above transactions assuming Crane uses
the net method and the periodic inventory system for recording purchases.
Kristi’s Mentoring had the following information for the pay period ending September
30:
Assume:
FICA-OASDI applied to the first $117,000 at a rate of 6.2%.
FICA-Medicare applied at a rate of 1.45%.
FUTA applied to the first $7,000 at a rate of 0.8%.
SUTA applied to the first $7,000 at a rate of 5.6%.
State income tax is 3.8%.
Employees contribute to their retirement fund at a rate of 5.5% of their gross earnings
Compute the employees’ FICA-Medicare.
The following information is available for Charter Company:
Complete the following chart to determine the total cost for each department, using the
most appropriate method to apportion the indirect costs.
Given the following accounts:
[1] Cash
[2] Accounts receivable
[3] Allowance for doubtful accounts
[4] Merchandise inventory
[5] Store supplies
[6] Store equipment
[7] Accumulated depreciation
[8] Notes payable
[9] Accounts payable
[10] Able Partner’s, Capital
[11] Baker Partner’s, Capital
[12] Able Partner’s, withdrawals
[13] Baker Partner’s, withdrawals
[14] Income summary
[15] Service revenue
[16] Gain on realization
[17] Loss on realization
Indicate the account(s) to be debited and credited to record the following transaction.
During liquidation realized more than book value for the merchandise inventory.
Debit ________ Credit ________ & ________