122)
Cantrell Company is required by law to collect and remit sales taxes to the state. If Cantrell has
$8,000 of cash sales that are subject to an 8% sales tax, what is the journal entry to record the cash
sales?
A)
Debit Accounts Receivable $8,640; credit Sales $8,000; credit Sales Taxes Payable $640.
B)
Debit Cash $8,000; credit Sales $7,360; credit Sales Taxes Payable $640.
C)
Debit Sales Taxes Payable $640; debit Cash $7,360; credit Sales $8,000.
D)
Debit Cash $8,000; credit Sales $8,000; and record the taxes when paid.
E)
Debit Cash $8,640; credit Sales $8,000; credit Sales Taxes Payable $640.
123)
Furniture World is required by law to collect and remit sales taxes to the state. If Furniture World
has $78,000 of cash sales that are subject to a 6% sales tax, what is the journal entry to record the
cash sales?
A)
Debit Accounts Receivable $82,680; credit Sales $78,000; credit Sales Taxes Payable $4,680.
B)
Debit Cash $82,680; credit Sales $78,000; credit Sales Taxes Payable $4,680.
C)
Debit Sales Taxes Payable $4,680; debit Cash $73,220; credit Sales $78,000.
D)
Debit Cash $78,000; credit Sales $73,320; credit Sales Taxes Payable $4,680.
E)
Debit Cash $78,000; credit Sales $78,000; and record the taxes when paid.
124)
All of the following statements regarding long-term liabilities are true except?
A)
Liabilities that do not have a fixed due date, but are payable on demand, are reported as
long-term liabilities.
B)
Long-term liabilities can be reported on the balance sheet in a single total or in multiple
categories.
C)
Long-term liabilities include long-term notes payable, warranty liabilities, lease liabilities,
and bonds payable.
D)
A single long-term liability can be divided between current and noncurrent sections on the
balance sheet.
E)
Liabilities not expected to be paid within the longer of one year or the company’s operating
cycle are reported as long-term liabilities.
125)
On April 12, Hong Company agrees to accept a 60-day, 10%, $4,500 note from Indigo Company to
extend the due date on an overdue account. What is the journal entry needed to record the
transaction by Indigo Company?
A)
Debit Notes Payable $4,500; credit Accounts Payable $4,500.
B)
Debit Sales $4,500; credit Notes Payable $4,500.
C)
Debit Accounts Payable $4,500; credit Notes Payable $4,500.
D)
Debit Cash $4,500; credit Notes Payable $4,500.
E)
Debit Accounts Receivable $4,500; credit Notes Payable $4,500.
126)
On April 12, Hong Company agrees to accept a 60-day, 10%, $4,500 note from Indigo Company to
extend the due date on an overdue account. What is the journal entry that Indigo Company would
make, when it records payment of the note on the maturity date? (Use 360 days a year.)
A)
Debit Cash $4,575; credit Interest Revenue $75; credit Notes Payable $4,500.
B)
Debit Notes Payable $4,500; credit Interest Expense $75, credit Cash $4,425.
C)
Debit Notes Payable $4,500; debit Interest Expense $75; credit Cash $4,575.
D)
Debit Cash $4,575; credit Interest Revenue $75; credit Notes Receivable $4,500.
E)
Debit Notes Payable $4,500; debit Interest Expense $112; credit Cash $4,612.
127)
On May 22, Jarrett Company borrows $7,500 from Fairmont Financing, signing a 90-day, 8%,
$7,500 note. What is the journal entry needed to record the transaction by Jarrett Company?
A)
Debit Cash $7,500; credit Notes Payable $7,500.
B)
Debit Notes Receivable $7,500; credit Cash $7,500.
C)
Debit Cash $7,650; credit Notes Payable $7,650.
D)
Debit Accounts Payable $7,500; credit Notes Payable $7,500.
E)
Debit Cash $7,500; credit Accounts Payable $7,500.
128)
On May 22, Jarrett Company borrows $7,500 from Fairmont Financing, signing a 90-day, 8%,
$7,500 note. What is the journal entry needed to record the payment of the note by Jarrett Company
on the maturity date?
A)
Debit Cash $7,650; credit Interest Revenue $150; credit Notes Receivable $7,500.
B)
Debit Notes Payable $7,500; credit Cash $7,500.
C)
Debit Notes Payable $7,500; credit Interest Expense $150; credit Cash $7,350.
D)
Debit Notes Payable $7,500; debit Interest Expense $150; credit Cash $7,650.
E)
Debit Notes Payable $7,650; credit Cash $7,650.
129)
An employee earns $5,500 per month working for an employer. The FICA tax rate for Social
Security is 6.2% of the first $118,500 earned each calendar year and the FICA tax rate for
Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is
5.4%. Both unemployment taxes are applied to the first $7,000 of an employee’s pay. The
employee has $182 in federal income taxes withheld. The employee has voluntary deductions for
health insurance of $150 and contributes $75 to a retirement plan each month. What is the amount
of net pay for the employee for the month of January? (Round your intermediate calculations to
two decimal places.)
A) $4,672.25 B) $4,430.25 C) $4,386.25 D) $4,827.00 E) $4,628.25
130)
During the first week of January, an employee works 46 hours. For this company, workers earn
150% of their regular rate for hours in excess of 40 per week. Her pay rate is $16 per hour, and her
wages are subject to no deductions other than FICA Social Security, FICA Medicare, and federal
income taxes. The tax rate for Social Security is 6.2% of the first $118,500 earned each calendar
year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is
0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of
an employee’s pay. The employee has $80 in federal income taxes withheld. What is the amount of
this employee’s gross pay for the first week of January?
A) $784 B) $1,156 C) $1,004 D) $736 E) $1,104
131)
During the first week of January, an employee works 46 hours. For this company, workers earn
150% of their regular rate for hours in excess of 40 per week. Her pay rate is $16 per hour, and her
wages are subject to no deductions other than FICA Social Security, FICA Medicare, and federal
income taxes. The tax rate for Social Security is 6.2% of the first $118,500 earned each calendar
year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is
0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of
an employee’s pay. The employee has $80 in federal income taxes withheld. What is the amount of
this employee’s net pay for the first week of January?
A) $784.00 B) $139.98 C) $923.98 D) $724.02 E) $644.02
132)
The chief executive officer earns $20,000 per month. As of May 31, her gross pay was $100,000.
The tax rate for Social Security is 6.2% of the first $118,500 earned each calendar year and the
FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the
SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee’s
pay. What is the amount of FICA-Social Security withheld from this employee for the month of
June?
A) $290.00 B) $268.25 C) $1,147.00 D) $7,347.00 E) $1,240.00
133)
The chief executive officer earns $20,000 per month. As of May 31, her gross pay was $100,000.
The tax rate for Social Security is 6.2% of the first $118,500 earned each calendar year and the
FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the
SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee’s
pay. What is the amount of FICA – Medicare withheld from this employee for the month of June?
A) $1,240.00 B) $7,347.00 C) $290.00 D) $1,147.00 E) $268.25
134)
An employee earned $4,600 in February working for an employer. The FICA tax rate for Social
Security is 6.2% of the first $118,500 earned during each calendar year and the FICA tax rate for
Medicare is 1.45% of all earnings. The employee has $644 in federal income taxes withheld and
has voluntary deductions for health insurance of $50 and contributes 10% of gross pay to a
retirement plan each month. The employer pays the $200 remainder of the health insurance
premium and an equal amount of contribution to the retirement fund. What is the amount of net
pay for the employee for the month of February?
A) $3,446.00 B) $3,496.00 C) $3,604.10 D) $3,094.10 E) $2,634.10
135)
An employee earns $5,500 per month working for an employer. The FICA tax rate for Social
Security is 6.2% of the first $118,500 of earnings each calendar year and the FICA tax rate for
Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is
5.4%. Both unemployment taxes are applied to the first $7,000 of an employee’s pay. The
employee has $182 in federal income taxes withheld. The employee has voluntary deductions for
health insurance of $150 and contributes $75 to a retirement plan each month. What is the amount
the employer should record as payroll taxes expense for the employee for the month of January?
A) $841.50 B) $750.75 C) $464.75 D) $602.75 E) $420.75
136)
An employee earned $4,600 in February working for an employer. Cumulative earnings of the
previous pay periods are $4,800. The FICA tax rate for Social Security is 6.2% of the first
$118,500 of earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all
earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment
taxes are applied to the first $7,000 of an employee’s pay. What is the amount the employer should
record as payroll taxes expense for the month of February?
A) $351.90 B) $483.90 C) $581.90 D) $230.00 E) $110.00
137)
All of the following statements regarding FICA taxes are true except:
A)
The amount of FICA deducted from the employee is credited to a liability account.
B)
FICA taxes are deducted from the employee.
C)
Employers must pay withheld FICA taxes to the IRS.
D)
A self-employed person is exempt from FICA taxes.
E)
An employer must pay FICA taxes equal to the amount withheld from the employee.
138)
Athena Company provides employee health insurance that costs $5,000 per month. In addition, the
company contributes an amount equal to 5% of the employees’ $120,000 gross salary to a
retirement program. The entry to record the accrued benefits for the month would include a:
A)
Debit to Medical Insurance Payable $5,000.
B)
Debit to Employee Benefits Expense $11,000.
C)
Credit to Employee Benefits Expense $11,000.
D)
Debit to Employee Retirement Program Payable $6,000.
E)
Debit to Payroll Taxes Expense $11,000.
139)
Athena Company’s salaried employees earn two weeks of vacation per year. It pays $858,000 in
total employee salaries for 52 weeks but its employees work only 50. Record Athena Company’s
weekly journal entry to record the vacation expense:
A)
Debit Vacation Benefits Expense $17,160; credit Vacation Benefits Payable $17,160.
B)
Debit Vacation Benefits Payable $16,500; credit Vacation Benefits Expense $16,500.
C)
Debit Vacation Benefits Payable $660; credit Vacation Benefits Expense $660.
D)
Debit Vacation Benefits Expense $16,500; credit Vacation Benefits Payable $16,500.
E)
Debit Vacation Benefits Expense $660; credit Vacation Benefits Payable $660.
140)
All of the following statements related to current liabilities for U.S. GAAP and IFRS are true
except:
A)
The definitions and characteristics of current liabilities are broadly similar for both U.S.
GAAP and IFRS.
B)
Because tax regulatory systems of countries are different, the approach to recording taxes is
totally different.
C)
The term provision is typically used under IFRS to refer to what is titled liability under U.S.
GAAP.
D)
When there is little uncertainty surrounding current liabilities, both require companies to
record them in a similar manner.
E)
When there is a known current obligation that involves an uncertain amount, but one that can
be reasonable estimated, both require similar treatment.
141)
All of the following statements related to recording warranty expense are true except:
A)
Recording estimated warranty expense complies with the full disclosure principle.
B)
Warranty costs are probable and the amount can be estimated.
C)
Warranty expense should be recorded in the period when the warranty service is performed.
D)
Recording estimated warranty expense complies with the matching principle.
E)
The seller reports a warranty obligation as a liability.
142)
During August, Boxer Company sells $356,000 in merchandise that has a one year warranty.
Experience shows that warranty expenses average about 5% of the selling price. The warranty
liability account has a credit balance of $12,800 before adjustment. Customers returned
merchandise for warranty repairs during the month that used $9,400 in parts for repairs. The entry
to record the estimated warranty expense for the month is:
A)
Debit Estimated Warranty Liability $9,400; credit Warranty Expense $9,400.
B)
Debit Warranty Expense $5,000; credit Estimated Warranty Liability $5,000.
C)
Debit Warranty Expense $17,800; credit Estimated Warranty Liability $17,800.
D)
Debit Estimated Warranty Liability $17,800; credit Warranty Expense $17,800.
E)
Debit Warranty Expense $14,400; credit Estimated Warranty Liability $14,400.
143)
During August, Boxer Company sells $356,000 in merchandise that has a one year warranty.
Experience shows that warranty expenses average about 5% of the selling price. The warranty
liability account has a credit balance of $12,800 before adjustment. Customers returned
merchandise for warranty repairs during the month that used $9,400 in parts for repairs. The entry
to record the customer warranty repairs is:
A)
Debit Warranty Expense $17,800; credit Estimated Warranty Liability $17,800.
B)
Debit Estimated Warranty Liability $17,800; credit Parts Inventory $17,800.
C)
Debit Warranty Expense $9,400; credit Estimated Warranty Liability $9,400.
D)
Debit Estimated Warranty Liability $9,400; credit Parts Inventory $9,400.
E)
Debit Warranty Expense $14,400; credit Estimated Warranty Liability $14,400.
144)
During June, Vixen Company sells $850,000 in merchandise that has a one year warranty.
Experience shows that warranty expenses average about 3% of the selling price. Customers
returned $14,000 of merchandise for warranty replacement during the month. The entry to record
the estimated warranty provision at the end of the month is:
A)
Debit Estimated Warranty Liability $14,000; credit Warranty Expense $14,000.
B)
Debit Warranty Expense $11,500; credit Estimated Warranty Liability $11,500.
C)
Debit Warranty Expense $25,500; credit Estimated Warranty Liability $25,500.
D)
Debit Warranty Expense $14,000; credit Estimated Warranty Liability $14,000.
E)
Debit Estimated Warranty Liability $11,500; credit Warranty Expense $11,500.