Chapter 13-Computational

c

102. Valley, Inc., is a retail store operating in a state with a 5% retail sales tax. The state law provides that the retail sales tax collected during the month must be remitted to the state during the following month. If the amount collected is remitted to the state on or before the twentieth of the following month, the retailer may keep 3% of the sales tax collected. On April 10, 2020 Valley remitted $203,700 tax to the state tax division for March 2020 retail sales. What was Valley's March 2020 retail sales subject to sales tax? a. $4,074,000. b. $3,990,000. c. $4,200,000. d. $4,112,500.

a

103. Jump Corporation has $3,000,000 of short-term debt it expects to retire with proceeds from the sale of 85,000 shares of common stock. If the stock is sold for $25 per share subsequent to the balance sheet date, but before the balance sheet is issued, what amount of short-term debt could be excluded from current liabilities? a. $2,125,000 b. $3,000,000 c. $875,000 d. $0

a

104. Elmer Corporation has $2,500,000 of short-term debt it expects to retire with proceeds from the sale of 50,000 shares of common stock. If the stock is sold for $30 per share subsequent to the balance sheet date, but before the balance sheet is issued, what amount of short-term debt could be excluded from current liabilities? a. $1,500,000 b. $2,500,000 c. $1000,000 d. $0

d

105. Palco Co., which has a taxable payroll of $1,200,000, is subject to FUTA tax of 6.2% that includes a state contribution rate of 5.4%. However, because of stable employment experience, the company's state rate has been reduced to 2%. What is the total amount of federal and state unemployment tax for Palco Co.? a. $139,200 b. $98,400 c. $48,000 d. $33,600

d

106. Roxy Co., which has a taxable payroll of $800,000, is subject to FUTA tax of 6.2% that includes a state contribution rate of 5.4%. However, because of stable employment experience, the company's state rate has been reduced to 2%. What is the total amount of federal and state unemployment tax for Roxy Co.? a. $93,600 b. $65,600 c. $32,000 d. $22,400

c

107. A company gives each of its 75 employees (assume they were all employed continuously through 2020 and 2021) 12 days of vacation a year if they are employed at the end of the year. The vacation accumulates and may be taken starting January 1 of the next year. The employees work 8 hours per day. In 2020, they made $21 per hour and in 2021 they made $24 per hour. During 2021, they took an average of 9 days of vacation each. The company's policy is to record the liability existing at the end of each year at the wage rate for that year. What amount of vacation liability would be reflected on the 2020 and 2021 balance sheets, respectively? a. $151,200; $210,600 b. $172,800; $216,000 c. $151,200; $216,000 d. $172,800; $210,600

c

108. A company gives each of its 75 employees (assume they were all employed continuously through 2020 and 2021) 12 days of vacation a year if they are employed at the end of the year. The vacation accumulates and may be taken starting January 1 of the next year. The employees work 8 hours per day. In 2020, they made $24.50 per hour and in 2021 they made $28 per hour. During 2021, they took an average of 9 days of vacation each. The company's policy is to record the liability existing at the end of each year at the wage rate for that year. What amount of vacation liability would be reflected on the 2020 and 2021 balance sheets, respectively? a. $176,400; $245,700 b. $201,600; $252,000 c. $176,400; $252,000 d. $201,600; $245,700

b

90. Greeson Corp. signed a three-month, zero-interest-bearing note on November 1, 2020 for the purchase of $500,000 of inventory. The face value of the note was $507,800. Greeson used a "Discount of Note Payable" account to initially record the note. Assuming that the discount will be amortized equally over the 3-month period and that there was no adjusting entry made for November, the adjusting entry made at December 31, 2020 will include a a. debit to Discount on Note Payable for $2,600. b. debit to Interest Expense for $5,200. c. credit to Discount on Note Payable for $2,600. d. credit to Interest Expense for $5,200.

d

91. The effective interest on a 12-month, zero-interest-bearing note payable of $400,000, discounted at the bank at 7% is a. 6.54%. b. 7%. c. 14.29%. d. 7.53%.

a

92. On September 1, Horton purchased $39,900 of inventory items on credit with the terms 1/15, net 30, FOB destination. Freight charges were $840. Payment for the purchase was made on September 18. Assuming Horton uses the perpetual inventory system and the net method of accounting for purchase discounts, what amount is recorded as inventory from this purchase? a. $39,501. b. $40,341. c. $40,740. d. $39,900.

d

93. Slack Inc. borrowed $400,000 on April 1. The note requires interest at 12% and principal to be paid in one year. How much interest is recognized for the period from April 1 to December 31? a. $0. b. $48,000. c. $32,000. d. $36,000.

b

94. Craig borrowed $700,000 on October 1, 2020 and is required to pay $720,000 on March 1, 2021. What amount is the note payable recorded at on October 1, 2020 and how much interest is recognized from October 1 to December 31, 2020? a. $700,000 and $0. b. $700,000 and $12,000. c. $720,000 and $0. d. $700,000 and $20,000.

c

95. Parton owes $3 million that is due on February 28. The company borrows $2,400,000 on February 25 (5-year note) and uses the proceeds to pay down the $3 million note and uses other cash to pay the balance. How much of the $3 million note is classified as long-term in the December 31 financial statements? a. $3,000,000. b. $0. c. $2,400,000. d. $600,000.

b

96. Venible newspapers sold 6,000 of annual subscriptions at $150 each on June 1. How much unearned revenue will exist as of December 31? a. $0. b. $375,000. c. $450,000. d. $900,000.

d

97. Bargain Surplus made cash sales during the month of October of $375,000. The sales are subject to a 6% sales tax that was also collected. Which of the following would be included in the summary journal entry to reflect the sale transactions? a. Debit Accounts Receivable for $375,000. b. Credit Sales Taxes Payable for $21,226. c. Credit Sales Revenue for $347,483. d. Credit Sales Taxes Payable for $22,500.

b

98. On February 10, 2021, after issuance of its financial statements for 2020, Higgins Company entered into a financing agreement with Cleveland Bank, allowing Higgins Company to borrow up to $8,000,000 at any time through 2023. Amounts borrowed under the agreement bear interest at 2% above the bank's prime interest rate and mature two years from the date of loan. Higgins Company presently has $3,000,000 of notes payable with Star National Bank maturing March 15, 2021. The company intends to borrow $5,000,000 under the agreement with Cleveland and liquidate the notes payable to Star National Bank. The agreement with Cleveland also requires Higgins to maintain a working capital level of $12,000,000 and prohibits the payment of dividends on common stock without prior approval by Cleveland Bank. From the above information only, the total short-term debt of Higgins Company as of the December 31, 2020 balance sheet date is a. $0. b. $3,000,000. c. $4,000,000. d. $8,000,000.

d

99. On December 31, 2020, Isle Co. has $6,000,000 of short-term notes payable due on February 14, 2021. On January 10, 2019, Isle arranged a line of credit with Beach Bank which allows Isle to borrow up to $4,500,000 at one percent above the prime rate for three years. On February 2, 2021, Isle borrowed $3,600,000 from Beach Bank and used $1,500,000 additional cash to liquidate $5,100,000 of the short-term notes payable. The amount of the short-term notes payable that should be reported as current liabilities on the December 31, 2020 balance sheet which is issued on March 5, 2021 is a. $0. b. $900,000. c. $1,500,000. d. $2,400,000.

b

Posner Co. is a retail store operating in a state with a 7% retail sales tax. The retailer may keep 2% of the sales tax collected. Posner Co. records the sales tax in the Sales Revenue account. The amount recorded in the Sales Revenue account during May was $754,350. 101. The amount of sales taxes payable (to the nearest dollar) to the state for the month of May is a. $37,719. b. $48,363. c. $62,286. d. $51,750.

b

Posner Co. is a retail store operating in a state with a 7% retail sales tax. The retailer may keep 2% of the sales tax collected. Posner Co. records the sales tax in the Sales Revenue account. The amount recorded in the Sales Revenue account during May was $754,350. 100. The amount of sales taxes (to the nearest dollar) for May is a. $62,286. b. $49,350. c. $67,893. d. $52,806.

a

Vanco Company has 70 employees who work 8-hour days and are paid hourly. On January 1, 2020, the company began a program of granting its employees 10 days of paid vacation each year. Vacation days earned in 2020 may first be taken on January 1, 2021. Information relative to these employees is as follows: Hourly Vacation Days Earned Vacation Days Used Year Wages by Each Employee by Each Employee 2020 $20.50 10 0 2021 22.50 10 8 2022 25.50 10 10 Vanco has chosen to accrue the liability for compensated absences at the current rates of pay in effect when the compensated time is earned. 111. What is the amount of the accrued liability for compensated absences that should be reported at December 31, 2022? a. $168,000. b. $394,800. c. $142,800. d. $193,200.

d

Vanco Company has 70 employees who work 8-hour days and are paid hourly. On January 1, 2020, the company began a program of granting its employees 10 days of paid vacation each year. Vacation days earned in 2020 may first be taken on January 1, 2021. Information relative to these employees is as follows: Hourly Vacation Days Earned Vacation Days Used Year Wages by Each Employee by Each Employee 2020 $20.50 10 0 2021 22.50 10 8 2022 25.50 10 10 Vanco has chosen to accrue the liability for compensated absences at the current rates of pay in effect when the compensated time is earned. 110. What is the amount of expense relative to compensated absences that should be reported on Vanco's income statement for 2020? a. $0. b. $142,800. c. $126,000. d. $114,800.