1) The Jamison and Stephens partnership reports net income of $50,000. Partner salary
allowances are Jamison $18,000 and Stephens $12,000. Any remaining income is
shared 60:40.
Instructions
Determine the amount of net income allocated to each partner.
2) Three quantitative techniques which are frequently used in capital budgeting
decisions are (1) _________________, (2) _________________, and (3)
___________________.
3) Employees at BJs Grill are paid 1.5 times their regular pay rate for each hour worked
in excess of 40 hours per week. The FICA tax rate is 8% of the first $100,000 of gross
earnings. The state unemployment tax rate is 5.4% of the first $7,000 of wages per
employee for the year and the federal unemployment tax rate is 6.2% per employee
with a credit of up to 5.4% for state unemployment taxes paid.
1>BJ hired an accountant to prepare the companys business tax filings. The accountant
charged BJs Grill $1,500 for his services. Earlier in the year, BJs paid this accountant
$2,000 for accounting advice incorporation of the business. The total amount of federal
unemployment tax that BJs will owe as a result of hiring the accountant during the year
is:
$____________
2>Homer Bates is paid weekly and worked nine hours per day Monday through Friday.
Assuming his regular wage rate is $11.00 per hour, how much is his gross pay for the
week?
$____________
3>Ron Davis worked five eight-hour days for the week and is paid a regular wage rate
of $18.00 per hour. His year-to-date earnings are less than $7,000. How much are the
federal unemployment taxes relating to his wages for the week?
$____________
4>Wallace earns a monthly salary of $9,700. How much should be deducted from
Wallaces November salary for FICA taxes?
$____________
5>Roger Deary works two hours per day, five days per week, cleaning kitchen
equipment. His regular wage rate is $7.00 per hour and he is not required to pay income
taxes, due to his low level of earnings. How much is Rogers weekly take-home pay?
$____________
4) Pug Corporation is issuing $600,000 of 8%, 5-year bonds when potential bond
investors want a return of 10%. Interest is payable semiannually. The present value of 1
factors are 4%, .67556 and 5%, .61391. The present value of an annuity factors are 4%,
8.1109 and 5%, 7.72173.
Instructions
Compute the market price (present value) of the bonds.
5) On January 1, 2014, Triad Corporation had 60,000 shares of $1 par value common
stock issued and outstanding. During the year, the following transactions occurred:
Mar.1Issued 25,000 shares of common stock for $550,000.
June1Declared a cash dividend of $2.00 per share to stockholders of record on June 15.
June30Paid the $2.00 cash dividend.
Dec.1Purchased 5,000 shares of common stock for the treasury for $22 per share.
Dec.15Declared a cash dividend on outstanding shares of $2.25 per share to
stockholders of record on December 31 .
Instructions
Prepare journal entries to record the above transactions.
6) Fillmita Cookery reported actual sales of $1,800,000, and fixed costs of $350,000.
The contribution margin ratio is 25%.
Instructions
Compute the margin of safety in dollars and the margin of safety ratio.
7) Sonoma Company and Woodberry Company decide to merge their proprietorships
into a partnership called Sonberry Company. The balance sheet of Woodberry Company
shows:
Accounts Receivable$18,000
Less: Allowance for doubtful accounts 1,500$16,500
Equipment$20,000
Less: Accumulated depreciation 10,000$10,000
The partners agree that the net realizable value of the receivables is $16,000 and that
the fair value of the equipment is $15,000.
Instructions
Indicate how the four accounts should appear in the opening balance sheet of the
partnership.
8) A ______________ cost system is appropriate when similar products are
continuously produced, whereas a ______________ cost system would be more
appropriate if the product is custom-made.
9) With the exception of land, plant assets experience a ______________ in service
potential over their useful lives.