ac 210 - exam 3 quiz & lab questions

Trickster Travel, Inc. borrowed $500,000 on November 1, 2017, and signed a twelve-month note bearing interest at 6% per year. Principal and interest are payable in full at maturity on October 31, 2016. No entries have yet been made in 2017 with respect to the note. In connection with this note, Trickster Travel, Inc. should report interest payable at December 31, 2017, in the amount of: $8,000. $30,000. $5,000. $25,000.

$5,000.

Viewmont Manufacturing began the year owing its suppliers $4,800 for merchandise purchased last year. Viewmont then sold half of this merchandise for $8,000 on account. Two weeks later, Viewmont paid its suppliers $1,600 and bought another $6,400 of merchandise on account. Viewmont now has an Accounts Payable balance of: $17,600. $9,600. $1,600. $7,200.

$9,600.

When a company collects sales tax from a customer at the point of sale, the event is recorded by: A debit to Sales Tax Expense and a credit to Sales Tax Payable. A debit to Cash and a credit to Sales Tax Payable. A debit to Sales Tax Payable and a credit to Sales Tax Expense. A debit to Cash and a credit to Sales Tax Revenue. A debit to Sales Tax Payable and a credit to Cash.

A debit to Cash and a credit to Sales Tax Payable.

On October 1, 2015, Attra Inc. borrows $208,000 on a three-year note that requires the company to pay 6% interest on March 31 and September 30. On December 31, 2015, the adjusting entry to accrue interest on the note should debit: Interest Payable and credit Interest Expense for $3,120. Interest Expense and credit Cash for $6,240. Interest Expense and credit Interest Payable for $6,240. Interest Expense and credit Interest Payable for $3,120.

Interest Expense and credit Interest Payable for $3,120.

On February 16, a company declares a 40¢ dividend to be paid on April 5. There are 2,060,000 shares of common stock issued and outstanding. The entry recorded by the company on February 16 includes a debit to: Dividends Payable and a credit to Cash for $781,600. Dividends and a credit to Dividends Payable for $824,000. Dividends and a credit to Dividends Payable for $781,600. Dividends Payable and a credit to Cash for $824,000.

Dividends and a credit to Dividends Payable for $824,000.

Which of the following events does not create a liability? Buying goods and services on credit Obtaining a short-term loan Issuing long-term debt Remitting (sending in) sales tax to the government

Remitting (sending in) sales tax to the government

Accumulated Depreciation: appears on the income statement. is a liability on the balance sheet. is a contra-stockholders' equity item. appears in the asset section of a balance sheet.

appears in the asset section of a balance sheet.

The journal entry to record depreciation: decreases assets and decreases net income. decreases assets and increases net income increases assets and decreases net income. Increases assets and decreases liabilities.

decreases assets and decreases net income.

If shares of common stock are issued at a market price greater than par value, the amount in excess of par should be credited to: Common Stock. Treasury Stock. Retained Earnings. Additional Paid-in Capital.

Additional Paid-in Capital.

John Zebu is the only employee of Atlantic Records, Inc. During the first week of January, Zebu earned $1,200.00 and had federal and state income tax withholdings of $60.00 and $22.50, respectively. FICA taxes are 7.65 % on earnings up to $117,000, or $91.80. State and federal unemployment taxes for the period are $75.00 and $12.00, respectively. What would be the amount of Zebu's payroll check for the first week of January? $1,200.00 $1,108.20 $1,025.70 $938.70 $933.90

$1,025.70

The Ideal Corp. has the following information for its payroll records: Salaries and wages earned by employees = $100,000 Less: income taxes withheld from employees = 15,000 Less: FICA taxes withheld from employees = 5,000 Net pay to employees= $80,000 The employer amount of FICA taxes that Ideal is required to pay is equal to the amount that it withholds from its employees. Assume no other payroll taxes are incurred at this time. What is Ideal's total expense with regards to this payroll? $80,000 $85,000 $100,000 $105,000

$105,000

During one pay period, your company distributes $132,000 to employees as net pay. The income tax withholdings from employee wages were $19,300 and the FICA withholdings from employee wages were $8,945. Total payroll costs (total payroll expense) to the company for this pay period, excluding any unemployment taxes, was: $178,135. $151,300. $160,245. $169,190.

$169,190.

During one pay period, your company distributes $133,000 to employees as net pay. The income tax withholdings were $19,500 and the employee's share of FICA withholdings were $8,963. Total payroll/labor costs to the company for this pay period, excluding any unemployment taxes, was: $133,000. $161,463. $152,500. $170,426.

$170,426

Cockroach Company purchased a new van on January 1, 2016. The van cost $32,000. It has an estimated life of five years and the estimated residual value is $4,100. Cockroach uses the double-declining-balance method to compute depreciation. What is the adjusted balance in the Accumulated Depreciation account at the end of 2017, the second year? $5,120. $20,480. $6,400 $15,360.

$20,480.

A company paid $500,000 to purchase equipment and $15,000 to have the equipment delivered to and installed in the company's production facilities. Commercial use of the equipment began on March 1, 2017. The estimated residual value of the equipment is $5,000. The equipment is expected to be used a total of 28,000 hours throughout its estimated useful life of six years. The company has a December 31, 2017 year-end and had used the equipment a total of 11,200 hours prior to the year-end. Using the units-of-production method, what amount of depreciation expense (to the nearest thousand) would the company report for this equipment in the income statement prepared for the year-ended December 31, 2017? $102,000 $198,000 $204,000 $206,000

$204,000

Digger Enterprises purchased equipment for $64,000. In addition, shipping charges of $800 were incurred to obtain the equipment. The company paid $5,000 to construct a foundation and install the equipment. The equipment is estimated to have a residual value of $6,000 at the end of its 5-year useful life. Using the straight-line method, what is the book value of the equipment at the end of the third full year of use? $22,120 $28,400 $31,520 $25,520

$31,520

Acme Enterprises began the year owing its suppliers $3,000 for merchandise purchased last year. Acme then sold half of this merchandise for $5,000 on account. Two weeks later, Acme paid its suppliers $1,000 and bought another $4,000 of merchandise on account. Acme now has an Accounts Payable balance of: $11,000. $6,000. $1,000. $4,500.

$6,000.

Gross earnings for the pay period are $100,000. Required payroll deductions are: Social Security $6,700; Medicare $1,450; Federal Income tax $18,000 and State income tax $3,850. What is the net pay to employees? $70,000 $100,000 $130,000 $78,150

$70,000

Contributed capital totals $30,000, Retained Earnings equals $65,000, Treasury Stock equals $18,000, and Common Stock equals $10,000. If the company does not have any accumulated other comprehensive income (loss), what is the total amount of stockholders' equity? $77,000 $113,000 $123,000 $87,000

$77,000

Just In Thyme, Inc. has the following December 31, 2018 equity balances: Common stock of $20,000; Additional paid-in capital of $30,000; and Retained earnings of $50,000. If Just In Thyme repurchases shares of its stock for $10,000, the total stockholders' equity balance would equal: $60,000 $90,000 $110,000 $40,000

$90,000

A company issues 1 million shares of common stock with a par value of $0.05 for $15.30 a share. The entry to record this transaction includes a debit to Cash for: - $50,000 and a credit to Common Stock for $50,000. - $15,300,000 and a credit to Common Stock for $15,300,000. - $15,300,000, a credit to Common Stock for $50,000, and a credit to Additional Paid-in Capital for $15,250,000. - $50,000, a debit to Capital Receivable for $15,250,000, a credit to Common Stock for $50,000, and a credit to Additional Paid-in Capital for $15,250,000.

- $15,300,000, a credit to Common Stock for $50,000, and a credit to Additional Paid-in Capital for $15,250,000.

Melrose Inc. buys back 314,000 shares of its stock from investors at $13.50 a share. Two years later, it reissues this stock for $13.00 a share. The stock reissue would be recorded with a debit to Cash for: - $4,082,000 million, a debit to Additional Paid-in Capital for $157,000, and a credit to Treasury Stock for $4,239,000 million. - $4,239,000 million, a credit to Treasury Stock for $4,082,000 million, and a credit to Additional Paid-in Capital for $157,000. - $4,239,000 million and a credit to Treasury Stock for $4,239,000 million. - $4,082,000 million and a credit to Treasury Stock for $4,082,000.

- $4,082,000 million, a debit to Additional Paid-in Capital for $157,000, and a credit to Treasury Stock for $4,239,000 million.

ABC Airlines collects $300 for a roundtrip ticket from Chicago to Los Angeles. The flights will not occur until the next accounting period. How does ABC Airlines record the $300 collected in advance? - A debit to Deferred Revenue of $300 and a credit to Cash of $300 - A debit to Cash of $300 and a credit to Revenue of $300 - A debit to Cash of $300 and a credit to Deferred Revenue of $300 - A debit to Revenue of $300 and a credit to Cash of $300

- A debit to Cash of $300 and a credit to Deferred Revenue of $300

Disco World began its business on November 1 and sold contracts to twelve students for dance lessons that day. The lessons cost $375 per person for a three-month period and the students are required to pay in advance. Assuming Disco World adjusts its accounts only at its December 31 year end, what entry must Disco World make to account for the services provided through that date? - Debit Cash and credit Dance Lessons Revenue for $3,000 - Debit Deferred Revenue and credit Dance Lessons Revenue for $4,500 - Debit Deferred Revenue and credit Dance Lessons Revenue for $3,000 - Debit Dance Lessons Revenue and credit Deferred Revenue for $3,000

- Debit Deferred Revenue and credit Dance Lessons Revenue for $3,000

Zebra Inc. buys new soda machines for $450,000 and pays $50,000 for installation costs. One-half of the total cost or $250,000 is paid in cash; a note in the amount of $250,000 is signed. How should the company record this transaction? - Debit Cash for $250,000, debit Notes Payable for $250,000, and credit Equipment for $500,000 - Debit Cash for $250,000, debit Notes Payable for $250,000, credit Equipment for $450,000, and credit Operating Expenses for $50,000 - Debit Equipment for $450,000, debit Operating Expenses for $50,000, credit cash for $250,000, and credit Notes Payable for $250,000 - Debit Equipment for $500,000, credit Cash for $250,000, and credit Notes Payable for $250,000

- Debit Equipment for $500,000, credit Cash for $250,000, and credit Notes Payable for $250,000

Which of the following are payroll taxes that are paid by employees? - Federal income tax, federal unemployment tax, and FICA tax - Social security, federal unemployment tax, and state unemployment tax - Social security, federal income tax, and federal unemployment tax - Federal income tax withheld, state income tax withheld, and FICA tax

- Federal income tax withheld, state income tax withheld, and FICA tax

Which of the following accurately describes the treatment of ordinary and extraordinary repairs? - Ordinary repairs are expensed as incurred; extraordinary repairs are expensed as incurred. - Ordinary repairs are treated as a capital expenditure; extraordinary repairs are expensed as incurred. - Ordinary repairs are expensed as incurred; extraordinary repairs are capitalized. - Ordinary repairs are treated as a capital expenditure; extraordinary repairs are treated as a capital expenditure.

- Ordinary repairs are expensed as incurred; extraordinary repairs are capitalized.

Which of the following statements most appropriately describes the purpose of depreciating a long-lived tangible asset? - To indicate how the asset has physically deteriorated. - To record that the asset's market value declines over time. - To match the cost of the asset to the period in which it generates revenue. - To reflect the concept of conservatism and enhance earnings per share.

- To match the cost of the asset to the period in which it generates revenue.

What kind of account is Deferred Revenue? A revenue account on the income statement A revenue account on the balance sheet A liability on the income statement A liability on the balance sheet

A liability on the balance sheet

The entry to record the initial borrowing of cash by issuing a promissory note will include a debit to ________ and a credit to ________. A) Cash; Notes Payable B) Notes Payable; Cash C) Interest Expense; Cash D) Cash; Interest Expense

A) Cash; Notes Payable

There are various budgets within the master budget. One of these budgets is the production budget. Which of the following BEST describes the production budget? A) It details the required direct labor hours. B) It details the required raw materials purchases. C) It is calculated based on the sales budget and the desired ending inventory. D) It summarizes the costs of producing units for the budget period.

A) It details the required direct labor hours.

When preparing the balance sheet for Papago Co. for December 31, 2018, which item would not be classified as a current liability? A) Note payable due March 1, 2020 B) Accounts payable C) Income taxes due on September 15, 2019 D) The current portion of a 30-year mortgage

A) Note payable due March 1, 2020

An unfavorable materials quantity variance indicates that: A) actual usage of material exceeds the standard material allowed for output. B) standard material allowed for output exceeds the actual usage of material. C) actual material price exceeds standard price. D) standard material price exceeds actual price.

A) actual usage of material exceeds the standard material allowed for output.

In an Initial Public Offering on May 1, 2009, Timmy Hilfigure purchased 1,000 shares of Abner Crummie, Inc. for $5,000. On April 30, 2015, Timmy Hilfigure sold the 1,000 shares for $8,000 to Ralph Loring. What is the effect of the sale on April 30, 2015? Abner Crummie, Inc. will record a $3,000 loss. Abner Crummie, Inc. will record a $3,000 gain. Abner Crummie, Inc. will not be directly affected by this transaction. Abner Crummie, Inc. will record a decrease in Cash of $8,000.

Abner Crummie, Inc. will not be directly affected by this transaction.

Avalon Industries buys equipment for $24,000, expects to use it for ten years, and anticipates its residual value to be $3,000. Using the straight-line method, the company should report annual depreciation for the equipment of: A) $4,200. B) $2,100. C) $2,400. D) $4,800.

B) $2,100.

The Enterprise Co. has the following information available from its accounting records: Shares outstanding throughout the year = $ 12,000 Net income for current year = $ 56,000 Stockholders' equity at beginning of year = $115,000 Stockholders' equity at end of year = $140,000 The company has no preferred stock. What is the return on equity? A) 40% B) 44% C) 49% D) 467%

B) 44%

A company issues 1 million shares of common stock with a par value of $0.02 for $15 a share. The entry to record this transaction includes a debit to Cash for: A) $20,000 and a credit to Common Stock for $20,000. B) $15,000,000 and a credit to Common Stock for $15,000,000. C) $15,000,000, a credit to Common Stock for $20,000, and a credit to Additional Paid-in Capital for $14,980,000. D) $20,000, a debit to Capital Receivable for $14,980,000, a credit to Common Stock for $20,000, and a credit to Additional Paid-in Capital for $14,980,000.

C) $15,000,000, a credit to Common Stock for $20,000, and a credit to Additional Paid-in Capital for $14,980,000.

Marshall Company purchases a machine for $800,000. The machine has an estimated residual value of $40,000. The company expects the machine to produce 2,000,000 units. The machine is used to make 400,000 units during the current period. If the units-of-production method is used, the depreciation expense for this period is: A) $160,000. B) $800,000. C) $152,000. D) $760,000.

C) $152,000.

Which of the following statements about capitalizing costs is correct? A) Capitalizing costs refers to the process of converting assets to expenses. B) All capitalized assets can be depreciated. C) Capitalizing a cost means to record it as an asset. D) Capitalizing costs results in an immediate decrease in net income.

C) Capitalizing a cost means to record it as an asset.

Which of the following accurately describes the treatment of ordinary and extraordinary repairs? A) Ordinary repairs are expensed as incurred; extraordinary repairs are expensed as incurred. B) Ordinary repairs are treated as a capital expenditure; extraordinary repairs are expensed as incurred. C) Ordinary repairs are expensed as incurred; extraordinary repairs are treated as a capital expenditure. D) Ordinary repairs are treated as a capital expenditure; extraordinary repairs are treated as a capital expenditure.

C) Ordinary repairs are expensed as incurred; extraordinary repairs are treated as a capital expenditure.

On October 1, 2015, Junk Inc. borrows $213,000 on a three-year note that requires the company to pay 8% interest on March 31 and September 30. On December 31, 2015, the adjusting entry to accrue interest on the note should debit: Interest Payable and credit Interest Expense for $4,260. Interest Expense and credit Interest Payable for $4,260. Interest Expense and credit Cash for $8,520. Interest Expense and credit Interest Payable for $8,520. Interest Expense and credit Interest Payable for $17,040.

Interest Expense and credit Interest Payable for $4,260.

Deferred revenue is a liability because: a. no cash has changed hands. b. goods or services have been paid for, but not yet provided to the customer. c. the company is transferring them to another period for tax reasons. d. the customer may someday return items purchased for a refund.

b. goods or services have been paid for, but not yet provided to the customer.

On November 1, 2018, Sky Mountain Co. borrowed $200,000 cash on a 6 month, 6% note payable that requires Sky Mountain to pay both principal and interest on April 30, 2019. Given no prior adjusting entries have been recorded, the adjusting journal entry on December 31, 2018, Sky Mountain's year-end, would include a: a. credit to Cash of $2,000. b. debit to Interest Expense of $12,000. c. credit to Interest Payable of $2,000. d. credit to Note Payable of $2,000. e. none of the above are correct.

c. credit to Interest Payable of $2,000.

On January 5, 2017, the Dream Resort books and accepts a cash payment for $32,000 for vacation services to be provided during spring break in March. The journal entry that will be made in March after the services are provided will include a: debit to Accounts Payable and a credit to Service Revenue. debit to Cash and a credit to Deferred Revenue. debit to Cash and a credit to Service Revenue. credit to Accounts Receivable and a credit to Service Revenue. credit to Service Revenue and a debit to Deferred Revenue.

credit to Service Revenue and a debit to Deferred Revenue.

A company receives $95 for merchandise sold to a consumer of which $5 is for sales tax. The $5 of sales tax: increases sales revenue. increases current liabilities. increases selling expenses. is not recorded until it is forwarded to the state government. decreases current liabilities.

increases current liabilities.

The number of shares outstanding equals the number of shares: issued minus the number of shares in treasury. authorized minus the number of shares issued. issued plus the number of shares in treasury. authorized plus the number of shares issued.

issued minus the number of shares in treasury.