Unit 9 Practice Test

A company has issued 100,000 new shares to shareholders in exchange for $3,000,000 cash. The shares are $10 par preferred shares. What is included in the journal entry necessary to record this issuance of shares? A. Debit to Preferred Stock, $10 par for $2,000,000 B. Credit to Preferred Stock, $10 par for $1,000,000 C. Debit to Paid-In Capital in Excess of Par for $2,000,000 D. Credit to Paid-In Capital in Excess of Par for $1,000,000

B. Credit to Preferred Stock, $10 par for $1,000,000

During the month, a company made retail sales of $100,000 to its customers. The sales tax rate is 7.00%. All sales are cash sales. All of those sales were properly recorded. At the end of the month, a company sends the necessary sales tax cash amount to the government. What is included in the journal entry necessary to record the cash payment of these sales taxes to the government? A. Debit to Sales Revenue for $7,000 B. Credit to Sales Revenue for $7,000 C. Credit to Sales Tax Payable for $7,000 D. Debit to Sales Tax Payable for $7,000

D. Debit to Sales Tax Payable for $7,000

Jaunty Coffee Co. made retail sales of $100,000 to its customers. The sales tax rate is 7.00%. All sales are cash sales. What is included in the journal entry necessary to record these sales? A. Credit to Sales Revenue for $100,000 B. to Sales Tax Payable for $107,000 C. Debit to Sales Revenue for $100,000 D. Debit to Sales Tax Payable for $107,000

A. Credit to Sales Revenue for $100,000

On March 23, Whole Pine Inc. declared a dividend of $2.50 per share to be paid on July 12 to shareholders of record on June 6. There are 100,000 shares outstanding. What is included in the journal entry necessary to record the declaration of the dividends on March 23? A. Debit to Dividends for $250,000 B. Credit to Cash for $250,000 C. Credit to Dividends for $250,000 D. Debit to Cash for $250,000

A. Debit to Dividends for $250,000

On May 29, Whole Pine Inc. declared a dividend of $1.00 per share to be paid on September 18 to shareholders of record on June 6. There are 100,000 shares outstanding. What is included in the journal entry necessary to record the declaration of the dividends on May 29? A. Credit to Dividends for $100,000 B. Credit to Dividends Payable for $100,000 C. Debit to Cash for $100,000 D. Debit to Dividends Payable for $100,000

B. Credit to Dividends Payable for $100,000

Here are payroll tax data related to the employees of a company: Federal Unemployment Taxes Payable $8,000 FICA Taxes Payable, Employer 64,000 State Unemployment Taxes Payable 40,000 What is included in the journal entry necessary to record these payroll tax data? A. Debit to Payroll Tax Expense for $64,000 B. Credit to State Unemployment Taxes Payable for $40,000 C. Credit to Payroll Tax Expense for $40,000 D. Debit to FICA Taxes Payable, Employer for $64,000

B. Credit to State Unemployment Taxes Payable for $40,000

A company has a long-term loan on which it is making annual payments of $30,000. This year, the $30,000 payment is composed of $18,000 in interest and $12,000 that actually goes toward repaying the loan. What is included in the journal entry necessary to record this $30,000 cash loan payment? A. Credit to Loan Payable for $18,000 B. Debit to Interest Expense for $18,000 C. Debit to Interest Expense for $12,000 D. Credit to Loan Payable for $12,000

B. Debit to Interest Expense for $18,000

In order to compute the present value of a future amount, a person needs to know the amount and the length of time until the future amount is to be received. Which additional quantity does a person need to know in order to do this computation? A. Profit margin B. Interest rate C. Debt ratio D. Exchange rate

B. Interest rate

A company is involved in litigation over who must clean up a toxic waste site near one of the company's factories. The likelihood that the company will be required to pay for the cleanup is remote. How should the company report this lawsuit in its financial statements? A. No liability in the balance sheet; some disclosure in the financial statement notes B. No liability in the balance sheet; no disclosure in the financial statement notes C. A liability in the balance sheet; some disclosure in the financial statement notes D. A liability in the balance sheet; no disclosure in the financial statement notes

B. No liability in the balance sheet; no disclosure in the financial statement notes

On January 1, Endothon Company had these equity account balances: Retained Earnings 150 Paid-In Capital 20 The information relates to things that happened during the year: Shareholders invested an additional $50 cash in the business. Net income for the year was $60. Dividends for the year were $10. What is Endothon Company's retained earnings at the end of the year? A. 130 B. 150 C. 200 D. 100

C. 200

An employee of a company earns a salary of $300 per day. In addition, for every 10 days that she works, she earns the right to take a paid sick day at some point in the future. Ignoring any payroll taxes and assuming that this employee's salary has not yet been paid, what is included in the journal entry necessary to record her salary for the most recent pay period, which involved her using 25 sick days? A. Debit to Salaries Expense for $300 B. Debit to Sick Days Payable for $300 C. Credit to Salaries Payable for $7,500 D. Credit to Salaries Expense for $7,500

C. Credit to Salaries Payable for $7,500

Here are payroll data for the employees of a company: FICA Taxes Payable, Employees $13,000 State Withholding Taxes Payable 8,000 Federal Withholding Taxes Payable 25,000 Salaries Payable 200,000 What is included in the journal entry necessary to record these employees' payroll data? A. Credit to Salaries Payable for $246,000 B. Credit to Salary Expense for $246,000 C. Debit to Salary Expense for $246,000 D. Debit to Salaries Payable for $246,000

C. Debit to Salary Expense for $246,000

A company is involved in litigation over who must clean up a toxic waste site near one of the company's factories. It is possible that the company will be required to pay for the cleanup. How should the company report this lawsuit in its financial statements? A. No liability in the balance sheet; no disclosure in the financial statement notes B. A liability in the balance sheet; some disclosure in the financial statement notes C. No liability in the balance sheet; some disclosure in the financial statement notes D. A liability in the balance sheet; no disclosure in the financial statement notes

C. No liability in the balance sheet; some disclosure in the financial statement notes