Accounting Final WileyPlus

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In each case, identify whether the item would appear on the balance sheet or income statement. -equipment

balance sheet

In each case, identify whether the item would appear on the balance sheet or income statement. -inventory

balance sheet

Which of the following financial statements is prepared as of a specific date?

balance sheet

Callable bonds can be redeemed by the issuing company at a stated dollar amount prior to maturity.

true

Pharoah Company incurs these expenditures in purchasing a truck: cash price $28,090, accident insurance (during use) $2,360, sales taxes $1,860, motor vehicle license $530, and painting and lettering $2,550. What is the cost of the truck?

32500 (cash price $28,090 + sales taxes $1,860 + painting and lettering $2,550)

Blue Spruce Corp. began the year with retained earnings of $395000. During the year, the company recorded revenues of $482000, expenses of $383000, and paid dividends of $44000. What was Blue retained earnings at the end of the year?

450000: $395000 + ($482000 - $383000) - $44000 = $450000 beginning retained earnings+(revenues - expenses)-dividends

A company sells a plant asset that originally cost $250000 for $100000 on December 31, 2017. The accumulated depreciation account had a balance of $100000 after the current year's depreciation of $25000 had been recorded. The company should recognize a

50000 loss on disposal $100000 - ($250000 - $100000) = ($50000) Sell. price - (cost − acc. dep.)

On January 1, 2017, the Ivanhoe Company ledger shows Equipment $38,000 and Accumulated Depreciation $13,840. The depreciation resulted from using the straight-line method with a useful life of 10 years and a salvage value of $3,400. On this date, the company concludes that the equipment has a remaining useful life of only 4 years with the same salvage value. Compute the revised annual depreciation.

5190 book value (38000-13840)-salvage value (3400)=depreciation cost (20760) 20760/4=5190

A company purchased factory equipment on April 1, 2017, for $98900. It is estimated that the equipment will have a $12500 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2017, is

6480 -98900-12500=86,400 -86,400/10=8,640 -8,640/12=720 -720x9 (amount of months)=6,480

Suppose during 2017 that Cypress Semiconductor Corporation reported net cash provided by operating activities of $94,256,000, cash used in investing of $42,442,000, and cash used in financing of $7,745,000. In addition, cash spent for fixed assets during the period was $25,745,000. No dividends were paid. Calculate free cash flow.

68,511,000 (94,256,000-25,745,000-0)

Cullumber Company bought a machine on January 1, 2017. The machine cost $144000 and had an expected salvage value of $24000. The life of the machine was estimated to be 4 years. The company uses the straight-line method of depreciation. The book value of the machine at the beginning of the third year would be

84000 ($144000 - $24000) ÷ 4 = $30000; $144000 - ($30000 × 2) = $84000 ((Cost - sal. val.) ÷ 4 yrs.) = ann. dep.; (Cost - (ann. dep. × 2))

In each case, identify whether the item would appear on the balance sheet or income statement. -retained earnings

balance sheet

Redeeming Bonds at Maturity

debit bonds payable, credit cash

Indicate in which part of the statement of cash flows each item would appear: operating activities, investing activities, or financing activities. -cash paid to stockholders (dividends)

financing activities

Indicate in which part of the statement of cash flows each item would appear: operating activities, investing activities, or financing activities. -cash received from issuing new common stock

financing activities

Gordon Chemicals Company acquires a delivery truck at a cost of $25,200 on January 1, 2017. The truck is expected to have a salvage value of $3,900 at the end of its 4-year useful life.Compute annual depreciation for the first and second years using the straight-line method.

first year: 5325 (25200-3900)=21300 21300/4=5325 second year: 5325 (always the same for straight line)

On a classified balance sheet, companies usually list current assets -with the largest dollar amounts first. -in the order in which they are expected to be converted into cash. -in the order of acquisition. -in alphabetical order.

in the order in which they are expected to be converted into cash

In each case, identify whether the item would appear on the balance sheet or income statement. -cost of goods sold

income statement

Name ratios useful in assessing: working on capital and current ratio

liquidity

Indicate in which part of the statement of cash flows each item would appear: operating activities, investing activities, or financing activities. -cash paid to suppliers

operating activities

A corporation records bond transactions when it

-issues or retires (buys back) bonds -when bondholders convert bonds into common stock

Suppose Columbia Sportswear Company had accounts receivable of $316,604,000 at January 1, 2017, and $217,038,000 at December 31, 2017. Assume sales revenue was $1,245,597,500 for the year 2017. What is the amount of cash receipts from customers in 2017?

1,345,163,500 -1,245,597,500+99,566,000 -99,566,000 is the decrease in accounts receivable

Sunland Company had the following two transactions related to its delivery truck. 1.Paid $38 for an oil change.2.Paid $564 to install special shelving units, which increase the operating efficiency of the truck.

1. maintenance repairs expense DEBIT 38 cash CREDIT 38 2. equip DEBIT 564 cash CREDIT 564

when a company retires bonds before maturity, it is necessary to:

1.eliminate the carrying value of the bonds at the redemption date; 2.record the cash paid; and 3.recognize the gain or loss on redemption.

Bonita Industries recorded the following cash transactions for the year:Paid $134500 for salaries.Paid $58200 to purchase office equipment.Paid $14600 for utilities.Paid $6400 in dividends.Collected $280000 from customers.What was Bonita net cash provided by operating activities?

130900: amount collected from customers-amount paid for salaries-amount paid for utilities (280000-134500-14600)

Cullumber Company reported net income of $162,030. It reported depreciation expense of $12,520 and accumulated depreciation of $48,710. Amortization expense was $6,640. Cullumber Company purchased new equipment during the year for $50,660. Determine net cash provided by operating activities under the direct method.

181190 Net cash provided by operating activities = $162,030 + $12,520 + $6,640 = $181,190

Pronghorn Corp. bought equipment on January 1, 2017. The equipment cost $340000 and had an expected salvage value of $70000. The life of the equipment was estimated to be 5 years. The depreciable cost of the equipment is

270000 (340000-70000)

Sunland Company bought equipment for $330000 on January 1, 2016. Sunland estimated the useful life to be 3 years with no salvage value, and the straight-line method of depreciation will be used. On January 1, 2017, Sunland decides that the business will use the equipment for a total of 5 years. What is the revised depreciation expense for 2017?

55000 ($330000 - 0) ÷ 3 = $110000; ($330000 - $110000) ÷ (5 - 1) = $55000 (Cost - sal. val.) ÷ 3 yrs. = dep./yr.; (Cost - A/D) ÷ (5 - 1)

In 2017 Vaughn Manufacturing had cash receipts of $57120 and cash disbursements of $32640. Vaughn's ending cash balance at December 31, 2017 was $79560. What was Vaughn's beginning cash balance?

55080 79560-(57120-32640)

These expenditures were incurred by Ivanhoe Company in purchasing land: cash price $58,210, assumed accrued property taxes $5,500, attorney's fees $2,190, real estate broker's commission $3,170, and clearing and grading $4,170. What is the cost of the land?

73240 ($58,210 + $5,500 + $2,190 + $3,170 + $4,170) = $73,240. -add all

Pharoah Company reported income taxes of $338,864,900 on its 2017 income statement and income taxes payable of $264,198,600 at December 31, 2016, and $521,065,300 at December 31, 2017. What amount of cash payments were made for income taxes during 2017?

81,998,200 cash payment for income taxes=income tax expense + decrease in income taxes payable - increase in income taxes payable 338,864,900-(521,065,300-264,198,600)=81,998,200

Carla Vista Co. purchases a patent for $183,300 on January 2, 2017. Its estimated useful life is 6 years.(a) Prepare the journal entry to record amortization expense for the first year. (b) Show how this patent is reported on the balance sheet at the end of the first year.

A. amortization expense DEBIT 30550 patents CREDIT 30550 (183300/6) B. Intangible Assets: Patents=$152750 (183300-30550)

Giant Corporation issues $200,000 of bonds for $189,000. (a) Prepare the journal entry to record the issuance of the bonds, and (b) show how the bonds would be reported on the balance sheet at the date of issuance.

A. cash DEBIT 189000 discount on bonds payable DEBIT 11000 bonds payable CREDIT 200000 B. long-term liabilities: bonds payable CREDIT 200000 less: discount on bonds payable: 11000, total is 189000

Sunland Company borrows $92,400 on July 1 from the bank by signing a $92,400, 10%, 1-year note payable.(a)Prepare the journal entry to record the proceeds of the note.(b)Prepare the journal entry to record the accrued interest at December 31, assuming adjusting entries are made only at the end of the year.

A. cash DEBIT 92400 notes payable CREDIT 92400 B. interest expense DEBIT 4620 interest payable CREDIT 4620 (92400x.1x6/12)

In each case, identify whether the item would appear on the balance sheet or income statement. -accounts payable

balance sheet

In each case, identify whether the item would appear on the balance sheet or income statement. -accounts receivable

balance sheet

In each case, identify whether the item would appear on the balance sheet or income statement. -common stock

balance sheet

redeeming bonds before maturity: Assume at the end of the fourth period, Candlestick Inc., having sold its bonds at a premium, retires the bonds at 103 after paying the annual interest. Assume that the carrying value of the bonds at the redemption date is $100,400 (principal $100,000 and premium $400). Candlestick records the redemption at the end of the fourth interest period (January 1, 2021) as:

bonds payable DEBIT 100000 premium on bonds payable DEBIT 400 loss on bond redemption DEBIT 2600 cash CREDIT 103000

A gain or loss on disposal of a plant asset is determined by comparing the -replacement cost of the asset with the asset's original cost. -original cost of the asset with the proceeds received from its sale. -book value of the asset with the asset's original cost. -book value of the asset with the proceeds received from its sale.

book value of the asset with the proceeds received from its sale

Busch Company has these obligations at December 31. For each obligation, indicate whether it should be classified as a current liability, noncurrent liability, or both. - a 10 year mortgage payable 200000 payable in ten 20000 annual payments

both

Expenditures that add to the utility of plant assets for more than one accounting period are -committed expenditures. -current expenditures. -revenue expenditures. -capital expenditures.

capital expenditures

Devor Corporation issues 100, five-year, 10%, $1,000 bonds dated January 1, 2017, at 100 (100% of face value). The entry to record the sale is:

cash DEBIT 100000 bonds payable CREDIT 100000

Assume that the Candlestick Inc. bonds previously described sell at 102 rather than at 98. The entry to record the sale is:

cash DEBIT 102000 bonds payable CREDIT 100000 premium on bonds payable CREDIT 2000

Larkspur, Inc. issues 9,800 shares of $104 par value preferred stock for cash at $117 per share.Journalize the issuance of the preferred stock.

cash DEBIT 1146600 (9800x$117) preferred stock CREDIT 1019200 (9800x$104) paid-in capital in excess of par value-preferred stock CREDIT 127400 (9800x$13)

Splish Brothers Inc. issues $268,000, 10-year, 7% bonds at 97. Prepare the journal entry to record the sale of these bonds on March 1, 2017.

cash DEBIT 259960 (268000x.97) discount on bonds payable DEBIT 8040 bonds payable CREDIT 268000

On May 10, Martinez Corp. issues 1,800 shares of $4 par value common stock for cash at $15 per share.Journalize the issuance of the stock.

cash DEBIT 27000 (1800x$15) common stock CREDIT 7200 (1800x$4) paid-in capital in excess of par value-common stock CREDIT 19800 (1800x$11)

Crane Company issues $310,000, 20-year, 7% bonds at 102. Prepare the journal entry to record the sale of these bonds on June 1, 2017

cash DEBIT 316200 (310000x1.02) bonds payable CREDIT 310000 premium on bonds payable CREDIT 6200

On June 1, Sage Hill Inc. issues 1,400 shares of no-par common stock at a cash price of $6 per share.Journalize the issuance of the shares.

cash DEBIT 8400 common stock CREDIT 8400 (1400x$6)

Assume that on January 1, 2017, Candlestick Inc. sells $100,000, five-year, 10% bonds at 98 (98% of face value) with interest payable on January 1. The entry to record the issuance is:

cash DEBIT 98000 discount on bonds payable DEBIT 2000 bonds payable CREDIT 100000

Each of these items must be considered in preparing a statement of cash flows for Irvin Co. for the year ended December 31, 2017. For each item, state how it should be shown in the statement of cash flows for 2017. -issued bonds for 200000 cash

cash inflow from financing activity

Each of these items must be considered in preparing a statement of cash flows for Irvin Co. for the year ended December 31, 2017.For each item, state how it should be shown in the statement of cash flows for 2017. -sold land costing 20000 for 20000 cash

cash inflow from investing activity

Each of these items must be considered in preparing a statement of cash flows for Irvin Co. for the year ended December 31, 2017.For each item, state how it should be shown in the statement of cash flows for 2017. -declared and paid a 50000 cash dividend

cash outflow from financing activity

Each of these items must be considered in preparing a statement of cash flows for Irvin Co. for the year ended December 31, 2017.For each item, state how it should be shown in the statement of cash flows for 2017. -purchased equipment for 180000 cash

cash outflow from investing activity

Presented below are a number of transactions. Determine whether each transaction affects common stock, dividends, revenue, expense, or does not affect stockholders' equity. Provide titles for the revenues and expenses. Select Not applicable for account title if neither a revenue nor an expense. -cash received from investors

common stock; not applicable

Busch Company has these obligations at December 31. For each obligation, indicate whether it should be classified as a current liability, noncurrent liability, or both. -a note payable for 10000 due in 2 years

concurrent liability

convertible vs callable bonds

convertible: can be converted into common stock at the bondholder's option. callable: can be redeemed (bought back), by the issuing company, at a stated dollar amount prior to maturity.

Easier to transfer ownership and raise funds, no personal liability.

corporation

Easier to transfer ownership.

corporation

easier to raise funds

corporation

no personal legal liability

corporation

The book value of a plant asset is the difference between the -cost of the asset and the accumulated depreciation to date. -cost of the asset and the amount of depreciation expense for the year. -replacement cost of the asset and its historical cost. -proceeds received from the sale of the asset and its original cost.

cost of the asset and the accumulated depreciation to date

Busch Company has these obligations at December 31. For each obligation, indicate whether it should be classified as a current liability, noncurrent liability, or both. -accounts payable of 60000

current liability

Busch Company has these obligations at December 31. For each obligation, indicate whether it should be classified as a current liability, noncurrent liability, or both. -interest payable of 15000 on the mortgage

current liability

maturity date

date final payment is due.

A company that receives money in advance of performing a service -debits Cash and credits Unearned Service Revenue. -debits Unearned Service Revenue and credits Accounts Payable -debits Cash and credits Prepaid Insurance. -debits Cash and credits Accounts Receivable.

debits cash and credits unearned service revenue

An expense -is basically the same as a liability. -decreases assets and liabilities. -decreases stockholders' equity. -leaves stockholders' equity unchanged.

decreases stockholders' equity

On July 1, 2019, Wright Company sells office furniture for $16,000 cash. The office furniture originally cost $60,000. As of January 1, 2019, it had accumulated depreciation of $41,000. Depreciation for the first six months of 2019 is $8,000. Prepare the journal entry to record depreciation expense up to the date of sale, July 1.

depreciation expense DEBIT 8000 accumulated depreciation-equipment CREDIT 8000

dividends; not applicable

Intangible assets are the rights and privileges that result from ownership of long-lived assets that -have been exchanged at a gain. -do not have physical substance. -must be generated internally. -are depreciated over their useful life.

do not have physical substance

Indicate whether each of the following transactions would increase, decrease, or not affect total assets, total liabilities, and total stockholders' equity. -declared stock dividend

doesn't affect any

Indicate whether each of the following transactions would increase, decrease, or not affect total assets, total liabilities, and total stockholders' equity. -distributed stock dividend declared in c (Declared stock dividend.)

doesn't affect any

Indicate whether each of the following transactions would increase, decrease, or not affect total assets, total liabilities, and total stockholders' equity. -stock split 3-for-1

doesn't affect any

doesn't effect stockholders equity; not applicable

A measure of profitability is the -current ratio. -debt to assets ratio. -working capital. -earnings per share.

earnings per share

Which of the following is not an intangible asset that is reported on the balance sheet? -Copyrights. -Goodwill. -Trademarks. -Employees.

employees

A company issues common stock for $30400 and uses $22800 of the cash to purchase a truck. What is the cumulative effect of these two transactions?

equity will be reduced by $30400

A current asset is -expected to be converted to cash or used in the business within a relatively short period of time. -the last asset purchased by a business. -an asset which is currently being used to produce a product or service. -usually found as a separate classification in the income statement.

expected to be converted to cash or used in the business within a relatively short period of time

How does the following affect stockholders' equity and which account title? -costs incurred for advertising

expense; advertising expense

expense; insurance expense

expense; salaries and wage expense

expenses; utilities expense

Bonds may be issued at

face value, below face value (discount), or above face value (premium) -bond prices are quoted as a percentage of face value

The contractual interest rate is the rate investors demand for loaning funds.

false

The market price of a bond is equal to its maturity value.

false

Borrowed $200,000 from Castle Bank, signing a 5-year note bearing 8% interest.

financing

Issued 100,000 shares of $5 par value common stock for $800,000 cash.

financing

In each case, identify whether the item would appear on the balance sheet or income statement. -interest expense

income statement

In each case, identify whether the item would appear on the balance sheet or income statement. -sales revenue

income statement

In each case, identify whether the item would appear on the balance sheet or income statement: -income tax expense

income statement

Indicate which statement you would examine to find each of the following items: income statement, balance sheet, retained earnings statement, or statement of cash flows. -revenue during the period

income statement

Prepare the entry Devor would make to accrue interest on December 31.

interest expense DEBIT 10000 interest payable CREDIT 10000 (100000x.1x12/12)

Prepare the entry Devor would make to pay the interest on Jan. 1, 2018.

interest payable 10000 cash 10000

On. Jan. 10, Novis Company purchased manufacturing equipment for $80,000 cash. What kind of activity is this?

investing

Purchased two semi-trailer trucks for $170,000 cash.

investing

Indicate in which part of the statement of cash flows each item would appear: operating activities, investing activities, or financing activities. -cash paid to purchase a new office building

investing activities

Goodwill -can be sold by itself to another company. -can be purchased and charged directly to stockholders' equity. -is only recorded when the purchase of an entire business occurs. -may be expensed upon purchase if desired.

is only recorded when the purchase of an entire business occurs

The purchase of an asset for cash -leaves total assets unchanged. -increases assets and stockholders' equity. -decreases assets and increases liabilities. -increases assets and liabilities.

leaves total assets unchanged

Research and development costs -are capitalized and then amortized over a period not to exceed 20 years. -are incurred as expenses only when R&D is successful. -should be included in the cost of the patent they relate to. -must be expensed when incurred under generally accepted accounting principles.

must be expensed when incurred under generally accepted accounting principles

Arcadia HS, purchased equipment for $510,000 which was estimated to have a useful life of 10 years with a salvage value of $10,000 at the end of that time. Depreciation has been recorded for 7 years on a straight-line basis. In 2019 (year 8), it is determined that the total estimated life should be 15 years with a salvage value of $5,000 at the end of that time. -what is the journal entry to correct the prior years' depreciation? -Calculate the depreciation expense for 2019.

no entry needed, no error depreciation expense=19,379 -book value=(510-10000)=500000 500000x7 years=350000 (accumulated depreciation) 510000-350000=160000 (new book value) -book value-salvage value/life in years=depreciation expense 16000-5000/8=19375

Collected $20,000 cash for services performed.

operating

Indicate in which part of the statement of cash flows each item would appear: operating activities, investing activities, or financing activities. -cash received from customers

operating activities

Shared control, tax advantages, increased skills and resources.

partnership

Paid employees $12,000 for salaries and wages.

operating

Gordon Chemicals Company acquires a delivery truck at a cost of $37,000 on January 1, 2017. The truck is expected to have a salvage value of $3,500 at the end of its 5-year useful life. Assuming the declining-balance depreciation rate is double the straight-line rate, compute annual depreciation for the first and second years under the declining-balance method.

year 1: 37000x.4=14800 year 2: (37000-14800)x.4=8880

Kingbird, Inc. has assets of $4306000, common stock of $1079000, and retained earnings of $666000. What are the creditors' claims on their assets?

$2561000 (4306000-1079000-666000)

current market price (present value) of a bond is a function of 3 factors:

-dollar amount to be received -length of time until the amounts are received -market rate of interest

bond certificate

-issued to the investor -provides name of the company issuing bonds, face value, maturity date, and contractual (stated) interest rate

Blossom Company sells office equipment on July 31, 2017, for $23,730 cash. The office equipment originally cost $79,700 and as of January 1, 2017, had accumulated depreciation of $36,130. Depreciation for the first 7 months of 2017 is $4,970.Prepare the journal entries to (a) update depreciation to July 31, 2017, and (b) record the sale of the equipment.

A. depreciation expense DEBIT 4970 accumulated depreciation-equip CREDIT 4970 B. accumulated depreciation- equip DEBIT 41100 (36130+4970) cash DEBIT 23730 loss on disposal of plant assets DEBIT 14870 (79700-41100-23730) equip CREDIT 79700

During the month of September, Lake Corporation's employees earned wages of $60,000. Withholdings related to these wages were $3,500 for Social Security (FICA), $6,500 for federal income tax, and $2,000 for state income tax. Costs incurred for unemployment taxes were $90 for federal and $150 for state. Prepare the September 30 journal entries for (a) salaries and wages expense and salaries and wages payable, assuming that all September wages will be paid in October, and (b) the company's payroll tax expense.

A. salaries and wages expense DEBIT 60000 FICA taxes payable CREDIT 3500 federal income taxes payable CREDIT 6500 state income taxes payable CREDIT 2000 salaries and wages payable CREDIT 48000 B. payroll tax expense DEBIT 3740 fica taxes payable CREDIT 3500 federal unemployment taxes payable CREDIT 90 state unemployment taxes payable CREDIT 150

Why should the income statement be prepared first? -The statement of cash flows should be prepared first because it determines the sources of cash. That information is then used in preparing the income statement. -Net income from the income statement flows into the retained earnings statement. The ending retained earnings balance then flows into the balance sheet. -The income statement does not have to be prepared first. Financial statements can be prepared in any order. -None of these answer choices are correct.

Net income from the income statement flows into the retained earnings statement. The ending retained earnings balance then flows into the balance sheet.

Bramble Corp. has 9,500 shares of common stock outstanding. It declares a $2 per share cash dividend on November 1 to stockholders of record on December 1. The dividend is paid on December 31.Prepare the entries on the appropriate dates to record the declaration and payment of the cash dividend.

Nov 1 cash dividends DEBIT 19000 dividends payable CREDIT 19000 Dec 31 dividends payable DEBIT 19000 cash CREDIT 19000 (9500x$2)

Indicate whether each of the following transactions would increase, decrease, or not affect total assets, total liabilities, and total stockholders' equity. -paid cash dividend declared in part a

assets; decrease liabilities; decrease equity; not affect

Indicate whether each of the following transactions would increase, decrease, or not affect total assets, total liabilities, and total stockholders' equity. -declared cash dividend

assets; not effect liabilities; increase equity; decrease

bonds

a form of interest-bearing notes payableissued by corporations, universities, and governmental agencies.

Greenspan Supply does not segregate sales and sales taxes at the time of sale. The register total for March 16 is $8,025. All sales are subject to a 7% sales tax. a. Compute sales taxes payable. b. Make the entry to record sales taxes payable and sales.

a. 525 (8025/1.07)=7500 7500x.07 OR 8025-7500=525 b. cash DEBIT 8025 sales revenue CREDIT 7500 sales tax payable CREDIT 525

Bramble University sells 6,000 season basketball tickets at $70 each for the entire 15-game home schedule.(a)Give the entry to record the sale of the season tickets. (b)Give the entry to record the revenue recognized after playing the first home game.

a. Cash DEBIT 420000 unearned ticket revenue CREDIT 420000 (6000x70) b. unearned ticket revenue DEBIT 28000 ticket revenue CREDIT 28000 (420000/15)

Bramble Corp. issued 1,200 9%, 8-year, $1,000 bonds dated January 1, 2017, at face value. Interest is paid each January 1.(a) Prepare the journal entry to record the sale of these bonds on January 1, 2017. (b) Prepare the adjusting journal entry on December 31, 2017, to record interest expense (c) Prepare the journal entry on January 1, 2018, to record interest paid.

a. cash DEBIT 1200000 bonds payable CREDIT 1200000 (1200x$1000) b. interest expense DEBIT 108000 interest payable CREDIT 108000 (1,200,000x.09) c. interest payable DEBIT 108000 cash CREDIT 108000

Betsy Strand's regular hourly wage rate is $16, and she receives an hourly rate of $24 for work in excess of 40 hours. During a January pay period, Betsy works 47 hours. Betsy's federal income tax withholding is $96, and she has no voluntary deductions. Assume that the FICA tax rate is 7.65%.Prepare the employer's journal entries to record (a) Betsy's pay for the period and (b) the payment of Betsy's wages. Use January 15 for the end of the pay period and the payment date

a. salaries and wages expense DEBIT 808 (40x$16+7x$24) federal income taxes payable CREDIT 96 FICA taxes payable CREDIT 61.81 (808x.0765) salaries and wages payable CREDIT 650.19 (808-61.81-96) b. salareis and wages payable CREDIT 650.19 cash DEBIT 650.19

A company's financial statements may contain errors even if debits and credit balance because -wrong but equal amounts may have been posted to correct accounts. -correct but equal amounts may have been posted to wrong accounts. -wrong but equal amounts may have been posted to wrong accounts. -of all these reasons.

all of these reasons

Hans Culver, president of Culver Corporation, believes that it is a good practice for a company to maintain a constant payout of dividends relative to its earnings. Last year, net income was $680,000, and the corporation paid $122,400 in dividends. This year, due to some unusual circumstances, the corporation had income of $1,530,000. Hans expects next year's net income to be about $780,000. What was Culver Corporation's payout ratio last year? If it is to maintain the same payout ratio, what amount of dividends would it pay this year?

payout ratio last year= 18% (122400/680000) dividends paid this year= 275400 (1530000x0.18)

payout ratio-last year=18% (122400/680000) dividends paid this year=275400 (1530000x.18)

Betsy Strand's regular hourly wage rate is $14, and she receives an hourly rate of $21 for work in excess of 40 hours. During a January pay period, Betsy works 47 hours. Betsy's federal income tax withholding is $97, and she has no voluntary deductions. Assume that the FICA tax rate is 7.65%.Prepare the employer's journal entry to record payroll taxes for the period. Ignore unemployment taxes.

payroll tax expense Debit 54.09 FICA taxes payable CREDIT 54.09 (40x$14+7x$21=707)707x.0765=54.09

face value

principal due at the maturity (amount that is paid back)

how to find net cash provided by financing activities

proceeds from issuance of bonds payable-dividends paid

Name ratios useful in assessing: earnings per share

profitability

contractual interest rate

rate to determine cash interest paid, contractual rate is stated as an annual rate.

Which of the following is an advantage of corporations relative to partnerships and sole proprietorships? -Reduced legal liability for investors. -Most common form of organization. -Harder to transfer ownership. -Lower taxes.

reduced legal liability for investors

revenue; rent revenue

revenue; service revenue

Net income will result during a time period when:

revenues exceed expenses

secured vs unsecured bonds

secured: have specific assets of the issuer pledged as collateral for the bonds. unsecured: are issued against the general credit of the borrower.

Simple to set up and maintains control with owner.

sole proprietorship

most owner control

sole proprietorship

tax advantages

sole proprietorship and partnership

Name ratios useful in assessing: debt to assets and free cash flow

solvency

If services are rendered on account, then -liabilities will decrease. -stockholders' equity will increase. -assets will decrease. -liabilities will increase.

stockholders' equity will increase

Which depreciation method is most frequently used in businesses today? -Straight-line. -Units-of-activity. -Double-declining-balance. -Declining-balance.

straight line

Secured bonds have specific assets of the issuer pledged as collateral.

true

The face value is the amount of principal the issuing company must pay at the maturity date.

Accounting Final WileyPlus

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