accounting exam 3 review

a company's employees earn $5,000 per day, work 5 days per week (Monday through Friday), and get paid each Friday. If the previous payday was January 26 and the accounting period ends on January 31, what is the ending balance in the wages payable account?

$15,000

assume the tax rate in your state is 8%. your cash register does not have a key for sales tax. however, the total amount of cash received for sales and sales tax during the month of June was $27,000. sales for the month of June totaled what?

$25,000

on January 1, 2017, $1,000,000, 10-year, 10% bonds, were issued at 97. Interest is paid annually on January 1. If the issuing corporation uses the straight-line method to amortize discount on bonds payable, the monthly amortization amount is

$250

during July, Audio City sold 200 radios for $50 each. Each radio had cost Audio City $32 to purchase and carried a two-year warranty. If 5 percent typically need to be replaced over the warranty period and one actually is replaced during July, for what amount in July should Audio City debit Product Warranty Expense?

$320

when the market rate of interest was 9%, Kennesaw Van Lines leased several transfer trucks. The annual payments are $1,000,000 and the life of the lease is 8 years. It is estimated that the useful life of the trucks is 10 years. The present value interest factors for 9% are provided below: nPV($1)PV(annuity)80.502$5.53590.46$5.995100.422$6.418 The company should record the acquisition of the trucks (rounded to nearest thousand) as an asset with a cost of:

$5,535,000

a company issues $200,000 of 20-year, 6 percent bonds at 95. If interest is paid semiannually, what is the amount of bond interest expense recorded (assuming straight-line amortization) on any interest date?

$6,250

a graphics design company issued bonds in the amount of $1,000,000 with a stated interest rate of 8%. If the interest is paid semiannually and the bonds are due in 10 years, what would be the total amount of interest paid over the life of the bonds?

$800,000

keystone Corporation's balance sheet showed the following liability and stockholders' equity amounts: Current Liabilities, $100,000; Bonds Payable, $150,000; Capital Lease Obligations, $20,000; Deferred Income Tax Liability, $5,000; and total stockholders' equity, $500,000. The debt-to-equity ratio is

0.55

use the following present value table for questions 17-18: Periods Present Value of $1 at 6% Present Value of Ordinary Annuity of $1 at 6% 10 0.558 7.360 11 0.527 7.887 12 0.497 8.384 17. What is the present value of 12 annual payments of $ 2,000 at 6 percent annual interest rate? a. $24,000. b. $16,768. c. $11,928. d. $19,450. 18. Assuming 6% interest compounded annually, what amount must be deposited today so that $24,000 may be withdrawn at the end of 12 years? a. $24,000. b. $11,928. c. $12,648. d. $19,450.

17. b. $16,768 18. b. $11,928

use the following table for questions 19 and 20: Periods Future Value of $1 at 6% Future Value of an Annuity at 6% 10 1.791 13.18 11 1.898 14.97 12 2.012 16.87 19. Thomas wants to make a one-time investment into a stock index fund of $2,000 this year. Assuming that this fund generates a 6% compounding interest rate annually, how much will Thomas have in his account after 12 years? a. $3,582. b. $3,796. c. $4,024. d. $26,360. 20. Thomas wants to make an investment into a stock index fund of $2,000 per year for 12 years. Assuming that this fund generates a 6% interest rate, how much will Thomas have in his account after 12 years? a. $33,740. b. $299,40. c. $26,360. d. $4,024.

19. c. $4,024 20. a. $33,740

gainesville Truck Center has a weekly payroll of $100,000 for its employees. Federal and state income taxes are withheld in the amounts of $17,000 and $4,000, respectively, and FICA taxes are withheld at a mandatory rate of 7.65% (6.2% for Social Security and 1.45% for Medicare). In addition, the federal and state unemployment taxes are applied at rates of 2% and 5%, respectively. Which of the following statements is true regarding the entry to record wages and the related liabilities?

Social security tax payable will be credited in the amount of $6,200.

which of the following involves a contingent liability?

a pending lawsuit

assume a 5% interest rate, your grandfather would like to share his fortune with you by paying you $1,200 over 4 years. Which of the following cash-flow streams has the highest present value? Year1 Year2 Year3 Year4 a. $500 $400 $200 $100 b. $100 $200 $400 $500 c. $300 $300 $300 $300 d. Any of the above, since they each sum to $1,200.

a.

gunder Company does not ring up sales taxes separately on the cash register. Total receipts for October amounted to $18,900. If the sales tax rate is 5%, what amount must be remitted to the state for October's sales taxes? a. $900 b. $945 c. $45 d. It cannot be determined.

a. 900

which of the following is not an intangible asset? a. Research and development costs b. Copyrights c. Franchise and licenses d. Goodwill

a. research and development costs

crowley Corporation purchased a building on January 2 by signing a long-term $600,000 mortgage with monthly payments of $5,500. The mortgage carries an interest rate of 10 percent. The amount owed on the mortgage at the end of the first month will be a. $595,000. b. $599,500. c. $600,000. d. $594,500.

b. $599,500

equipment was purchased for $17,000. Freight charges amounted to $700 and there was a cost of $2,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $3,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be a. $3,940. b. $3,340. c. $2,860. d. $2,800.

b. 3,340

the following totals for the month of November were taken from the payroll register of Levine Company: Salaries expense $12,000 Social security and Medicare taxes withheld 550 Income taxes withheld 2,500 Medical insurance deductions 250 Life insurance deductions 200 Salaries subject to federal and state unemployment taxes of 6.2 percent 4,000 The entry to record the payment of net payroll would include a a. debit to Salaries Payable for $12,000. b. debit to Salaries Payable for $8,500. c. debit to Salaries Payable for $7,950. d. credit to Cash for $9,050.

b. debit to salaries payable for $8,500

if bonds are issued at par, it means that the a. financial strength of the issuer is suspect. b. market interest rate is the same as the stated/contractual interest rate. c. market interest rate is higher than the stated/contractual interest rate. d. market interest rate is lower than the stated/contractual interest rate..

b. market interest rate is the same as the stated/contractual interest rate

the cost of intangible assets with definite useful life should be amortized over a. 40 years. b. the shorter of its legal life or its useful life. c. the longer of its legal life or its useful life. d. its useful life.

b. the shorter of its legal life or its useful life

when the yield/market rate of interest is greater than the contractual/stated rate of interest

bonds will be issued at a discount

knollwood Corporation issued $296,000 of 30-year, 8 percent bonds at 106 on one of its semiannual interest payment dates. The straight-line method of amortization is to be used. How much bond interest expense will be recorded on the next interest payment date? a. $11,840 b. $11,240 c. $11,544 d. $12,136

c. $11,544

suffolk Corporation issued $90,000 of 20-year, 6 percent bonds at 98 on one of its semiannual interest payment dates. The straight-line method of amortization is to be used. How much bond interest expense will be recorded on the next interest payment date? a. $5,400 b. $2,700 c. $2,745 d. $5,445

c. $2,745

bonds payable with face value of $500,000 and term of 20 years were issued on January 1, 2017, for $510,000. On the maturity date, what amount will the company pay to bondholders? a. $25,000 b. $510,000 c. $500,000 d. $2,550

c. $500,000

the following costs were incurred to acquire and prepare land for a new parking lot: purchase price of land, $900,000; cost to clear the land, $40,000; cost of paving, $35,000; and cost of lighting for the parking lot, $20,000. How much should be recorded in the Land Improvements account? a. $20,000 b. $35,000 c. $55,000 d. $40,000

c. $55,000

fast Corporation borrowed $150,000 on March 1, 2017, signing a one-year, 7% note payable to City Bank. The adjusting entry required on December 31, 2017, includes a a. debit to Interest Expense of $10,500. b. debit to Cash of $180,000. c. credit to Interest Payable of $8,750. d. credit to Interest Revenue of $8,750.

c. credit to interest payable of $8,750

the amortization of premium on bonds payable a. will increase bond interest expense. b. should take place over a period not to exceed 40 years. c. will decrease bond interest expense. d. will increase bond interest revenue.

c. will decrease bond interest expense

westot's Retail Store regularly makes payments to a state government for the sales taxes resulting from its sales to customers. These sales taxes a. should appear on Westot's income statement as an expense. b. are based upon a company's gross profit in most states. c. are long-term liabilities when they have been paid. d. are collected by Westot's as an agent for the state's taxing authority

d. are collected by westot's an agent for the state's taxing authority

crowley Corporation purchased a building on January 2 by signing a long-term $600,000 mortgage with monthly payments of $5,500. The mortgage carries an interest rate of 10 percent. The entry to record the mortgage will include a a. debit to the Mortgage Payable account for $600,000. b. credit to the Cash account for $600,000. c. debit to the Cash account for $600,000. d. credit to the Mortgage Payable account for $600,000.

d. credit to the mortgage payable account for $600,000

which of the following assets is not subject to depreciation, depletion, or amortization? a. Gas fields b. Patents c. Land improvements, such as parking lots and fences d. Land

d. land

an unsecured bond is also known as a

debenture bond

crowley Corporation purchased a building on January 2 by signing a long-term $600,000 mortgage with monthly payments of $5,500. The mortgage carries an interest rate of 10 percent. The entry to record the first monthly payment will include a

debit to the interest expense account for $5,000

a corporation issues bonds that pay interest each April 1 and October 1. The corporation's December 31 adjusting entry could include a

debit to unamortized bond premium

which of the following best describes the behavior over time of the components of equal mortgage payments?

interest expense decreases and reduction in principal increases.

on October 1st, a company borrowed $60,000 from Eighth National Bank on a 1-year, 7% note. If the company's fiscal year ends on December 31st, a year-end adjusting entry is required to increase

interest payable by $1,050

failure to record a liability probably will

result in an overstated net income