138.
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 $1,800 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:
9-82
139.
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 $1,800 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:
140.
During June, Vixen Fur 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:
141.
During June, Vixen Fur 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 settle the customer warranties is:
142.
If a company has advance subscription sales totaling $45,000 for four quarterly journals
that will mailed to customers in the upcoming year, the receipt of cash would be
journalized as:
143.
A company has advance subscription sales totaling $45,000 for four quarterly journals that
will mailed to customers in the upcoming year. When the company mails the first quarterly
journal to customers, it should record:
144.
Carson Company faces a probable loss on a pending lawsuit where the amount of the loss
is estimated to be $500,000. The journal entry to recognize the potential loss is:
145.
On December 1, Watson Enterprises signed a $24,000, 60-day, 4% note payable as
replacement of an account payable with Erikson Company. What amount of interest
expense is accrued at December 31, the company’s year-end, on the note?
146.
On December 1, Watson Enterprises signed a $24,000, 60-day, 4% note payable as
replacement of an account payable with Erikson Company. What is the journal entry that
should be recorded upon signing the note?
147.
On September 1, Knack Company signed a $50,000, 90-day, 5% note payable with Central
Savings Bank. What is the journal entry that should be recorded by Knack upon maturity of
the note?
148.
A company’s has fixed interest expense of $52,000, income taxes expense of $121,000,
and net income of $281,000. The company’s times interest earned ratio equals:
149.
Gladstone Company liabilities include $13,500 of accounts payable, $8,000 of wages
payable, $6,300 of unearned revenue, $32,000 note payable due in 18 months, $70,000 of
10-year bonds payable, and $41,000 of taxes payable. Gladstone’s current liabilities equal:
150.
Loong Industries sells materials on March 16 for $12,000 cash, subject to 8% sales tax.
The cost of the materials sold is $5,700. The revenue portion of the transaction is recorded
as:
151.
Loong Industries collected $17,350 of sales tax on sales to customers during the month of
March. When Loong remits these collections to the government in early April, the correct
journal entry will be:
152.
Freedom Air collected $165,000 in February for charter flights booked for March and April
and properly recorded the amount collected as Unearned Charter Revenue. The flights
provided during March earned revenue of $83,400. The correct entry to record the revenue
earned in March is:
153.
Jones Pharmacy agreed to pay $2,000 monthly for employee medical insurance and
contribute 12% of employees’ gross salaries to a retirement program. If gross salaries of
employees in August were $37,000, the entry to record these accrued benefits will include
a:
154.
If an employer offers a bonus to its employees equal to 5% of the company’s annual net
income, and the expected annual pre-bonus net income is $320,000, what bonus amount
should be used in the year-end adjusting entry to record this benefit (rounded to the
nearest whole dollar)?
155.
Coastal Oil has three pending legal cases against it for environmental damages due to a
recent spill. The company’s legal counsel has determined that it is probable the company
will lose a suit by the state for $8,000,000 to cover cleanup costs. It advises that there is a
remote chance of losing a claim by a neighborhood association for $1,000,000 due to
emotional distress over the condition of the coastline. The third claim of $500,000 for
health issues arising from suspected water contamination is considered reasonably
possible to be won by the claimants. The amount that Costal should record in its
accounting records related to these suits is:
156.
Zephyr Company’s salaried employees earn four weeks of vacation per year. It pays
$1,075,200 in total employee salaries for 52 weeks but its employees work only 48 weeks.
The amount Zephyr should record as its weekly vacation expense is (round to the nearest
whole dollar):
9-96
157.
Victory Auto Sales, a used car dealership, offers a one-year or 12,000 mile warranty
covering parts on all vehicles it sells. The dealer’s experience shows that warranty
expense averages about 3% of a car’s selling price. During July, Victory sold 7 cars for a
total of $105,000. The entry to record the estimated expense and liability related to its July
sales is:
Matching Questions
9-97
158.
Match each of the following terms with the appropriate definitions.
1. Payroll
Compensation provided to employees
beyond salaries and wages, such as premiums
for medical insurance and contributions to
2. Voluntary
Also called take-home pay, an amount equal
A special bank account used solely for
paying employees; each pay period an amount
equal to the total employees’ net pay is
deposited and the employees’ payroll checks
4. Employee
A bank authorized to accept deposits of
amounts payable to the federal government,
A record for a pay period that shows the pay
period dates, regular and overtime hours
6. Payroll bank
Total compensation earned by an
7. Federal
depository
A tax employers are required to withhold
from employees’ pay made up of 1) retirement,
A federal unemployment tax that employers
are subject to, based on wages and salaries
A wage and tax statement provided to each
employee as an annual report of wages and
amounts of FICA and federal income taxes
159.
Match each of the following terms with the appropriate definitions.
1. Unearned
A company’s obligations not expected to
be paid within the longer of one year or the
2. Deferred
income tax
A written promise to pay a specified
amount on a definite future date within one
year or the company’s operating cycle,
3. Short-term
The liability account for recording taxes
levied on retail sales and collected from
4. Contingent
Amounts received in advance from
5. Current
Amounts owed to suppliers for products
6. Trade accounts
A potential obligation that depends on a
future event arising from a past transaction
7. Times interest
A calculation of a company’s risk of its
8. Sales taxes
A seller’s obligation to replace or correct
a product or service that fails to perform as
9. Long-term
Payments of income taxes that are
postponed until future years because of
temporary differences between GAAP and
Obligations due within one year or the
company’s operating cycle, whichever is
160.
Match each of the following terms with the appropriate definitions.
1. Withholding
Payroll taxes on employers assessed by
the federal government to support the
A potential obligation that depends on a
future event arising from a past
3. Long-term
A measure provided by a state to
employers that reflects a company’s
Obligations of a company requiring
payment in more than one year or operating
Known obligations of an uncertain
6. Wage bracket
Gross pay less all tax and voluntary
A table of amounts of income tax to be
A seller’s obligation to replace or correct
a product or service that fails to perform as
9. Estimated
A number indicated on an employee’s
Form W-4 that is used to reduce the
amount of federal income tax withheld from
10. Contingent
Taxes that fund Social Security and
Medicare, assessed on both employer and
employees under the Federal Insurance