A company’s employees had the following earnings records at the close of the current
payroll period:
The company’s payroll taxes expense on each employee’s earnings includes: FICA
Social Security taxes of 6.2% on the first $87,000 plus 1.45% FICA Medicare on all
wages; 0.8% federal unemployment taxes on the first $7,000; and 2.5% state
unemployment taxes on the first $7,000. Compute the employer’s total payroll taxes
expense for the current pay period.
Answer:
Prepare an income statement from the adjusted trial balance of Hanson Storage.
Answer:
Describe the three types of inventories that are carried by manufacturers..
Answer:
A company allows its customers to use bank credit cards to charge purchases. When
customers use the credit cards, the net amount is deposited in the company’s checking
account. The company also is charged a 2.5% service charge for these credit card sales.
Assume that on April 13, the company sold $25,000 worth of merchandise to customers
who used credit cards. Prepare the company’s journal entry to record the credit card
sales for April 13 assuming the company deposited the receipts that same day.
Answer:
The _____________________ is the simplest capital budgeting method studied in this
chapter.
Answer:
Explain the differences between cash and cash equivalents.
Answer:
What does FOB stand for? Differentiate between FOB shipping point (or FOB factory)
and FOB destination?
Answer:
_______________ and _______________ are product costs that can be directly traced
to the product.
Answer:
________________ includes currency, coins, and amounts on deposit in checking
accounts and many savings accounts.
Answer:
A sales system with prenumbered, controlled sales slips is an example of the internal
control principle of _______________________.
Answer:
Explain the amortization of a bond discount. Identify and describe the amortization
methods available.
Answer:
A company uses a sales journal, purchases journal, cash receipts journal, cash
disbursements journal, and general journal. A perpetual inventory system is used. The
following transactions were completed by the company during the current month of
October:
Record these transactions in the appropriate journal shown below:
Answer:
A company reported the following stockholders’ equity on January 1 of the current
year:
Prepare journal entries for the following selected transactions related to this company’s
stock during the current year:
Answer:
________________________ are checks written (or drawn) by the depositor, deducted
on the depositor’s records and sent to the payee, but not yet recorded by the bank for
payment at the bank statement date.
Answer:
Outdoors Unlimited accepts the Explorer credit card from its customers. Explorer
charges a 3.5% service fee and pays Outdoors Unlimited the amount net of Explorer
charges once a month. During February, Outdoors Unlimited sold $27,000 worth of
merchandise to customers using the Explorer charge card. On February 28, Outdoor
Unlimited sent the $27,000 worth of credit card receipts to Explorer. On March 4,
Outdoors Unlimited received cash proceeds from Explorer for the February credit sales
less the service charge. Prepare the general journal entries to record February sales and
the March 4 cash receipt.
Answer:
The Woodview Company uses a sales journal, purchases journal, cash receipts journal,
cash disbursements journal, and general journal. They use the perpetual method. The
following transactions occurred during the current month of December:
Record the above transactions into the appropriate journals shown below:
Answer:
Josephine’s Bakery had the following assets and liabilities at the beginning and end of
the current year:
If the owners invested an additional $12,000 in the business during the year, but no
dividends were paid, what was the amount of net income earned by Josephine’s Bakery
during the current year?
Answer:
Hector Corp. purchased 1,000 shares of Landmark Corp.’s common stock for $36,850
cash. This purchase is considered a long-term available-for-sale investment by Hector.
Prepare Hector’s journal entry to record the purchase.
Answer: