Accounting Final

A company has net sales of $1,200,000 and average accounts receivable of $400,000. What is its accounts receivable turnover for the period?

3.0

A contingent liability is:

A potential obligation that depends on a future event arising from a past transaction or event.

The cost of land would not include:

Cost of parking lot lighting.

Which of the following is not true regarding a bank (or third party) credit card expense?

Credit card expense is not recorded by the seller.

Marks Consulting purchased equipment costing $45,000 on January 1, Year 1. The equipment is estimated to have a salvage value of $5,000 and an estimated useful life of 8 years. Straight-line depreciation is used. If the equipment is sold on July 1, Year 5 for $20,000, the journal entry to record the sale will include a:

Debit to accumulated depreciation for $22,500.

Extraordinary repairs:

Extend the useful life of an asset beyond its original estimate.

All of the following are employer payroll taxes except

Federal income tax equal to that withheld from employees

An estimated liability:

Is a known obligation of an uncertain amount that can be reasonably estimated

Amounts received in advance from customers for future products or services:

are liabilities

Obligations to be paid within one year or the company's operating cycle, whichever is longer, are:

current liabilities

Obligations not expected to be paid within the longer of one year or the company's operating cycle are reported as:

long-term liabilities

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the accumulated depreciation at the end of the second year of its useful life using the double-declining-balance method?

$1,224

A company purchased a weaving machine for $190,000. The machine has a useful life of 8 years and a residual value of $10,000. It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life. In the first year, 15,000 bolts were produced. In the second year, production increased to 19,000 units. Using the units-of-production method, what is the book value of the machine at the end of the second year?

$108,400.

Merchant Company purchased property for a building site. The costs associated with the property were: Purchase price $ 185,000 Real estate commissions 15,000 Legal fees 700 Expenses of clearing the land 2,000 Expenses to remove old building 4,000 What portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building?

$206,700 to Land; $0 to Building.

On December 31 of the current year, the unadjusted trial balance of a company using the percent of receivables method to estimate bad debt included the following: Accounts Receivable, debit balance of $95,250; Allowance for Doubtful Accounts, credit balance of $921. What amount should be debited to Bad Debts Expense, assuming 6% of outstanding accounts receivable at the end of the current year are estimated to be uncollectible?

$4,794.

A company purchased a weaving machine for $190,000. The machine has a useful life of 8 years and a residual value of $10,000. It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life. In the first year, 15,000 bolts were produced. In the second year, production increased to 19,000 units. Using the units-of-production method, what is the amount of depreciation expense that should be recorded for the second year?

$45,600.

Portia Grant is an employee who is paid monthly. For the month of January of the current year, she earned a total of $8,260. The FICA tax for social security is 6.2% of the first $128,400 of employee earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The FUTA tax rate of .6% and the SUTA tax rate of 5.4% are applied to the first $7,000 of an employee's pay. The amount of federal income tax withheld from her earnings was $1,325.17. Her net pay for the month is: (Round your intermediate calculations to two decimal places.)

$6,302.94

Triston Vale is paid on a monthly basis. For the month of January of the current year, he earned a total of $5,210. FICA tax for Social Security is 6.2% on the first $128,400 of earnings each calendar year and the FICA tax for Medicare is 1.45% of all earnings. The FUTA tax rate is 0.6% and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The amount of Federal Income Tax withheld from his earnings was $885.70. What is the amount of the employer's payroll taxes expenses for this employee?

$711.17

A company borrowed $10,000 by signing a 180-day promissory note at 9%. The total to be paid at maturity of the note is:

10450

The interest accrued on $7,500 at 6% for 90 days is:

112.50

An employee earned $37,000 during the year working for an employer when the maximum limit for Social Security was $128,400. The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The employee's annual FICA taxes amount is:

2830.5

Peavey Enterprises purchased a depreciable asset for $22,000 on April 1, Year 1. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's salvage value is $2,000, Peavey Enterprises should recognize depreciation expense in Year 2 in the amount of:

5,000

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the first year of its useful life using the double-declining-balance method?

680

On December 1, Victoria Company signed a 90-day, 6% note payable, with a face value of $15,000. What amount of interest expense is accrued at December 31 on the note?

75

All of the following statements regarding uncertainty in liabilities are true except

A company only records liabilities when it knows whom to pay, when to pay, and how much to pay. Without all three, a liability cannot be recorded.

Martinez owns machinery that cost $87,000 with accumulated depreciation of $40,000. The company sells the machinery for cash of $42,000. The journal entry to record the sale would include:

A credit to Accumulated Depreciation of $40,000.

A machine costing $75,000 is purchased on September 1, Year 1. The machine is estimated to have a salvage value of $10,000 and an estimated useful life of 4 years. Double-declining- balance depreciation is used. If the machine is sold on December 31, Year 3 for $13,000, the journal entry to record the sale will include: A) A credit to gain on sale for $8,000. B) A debit to loss on sale for $2,625. C) A credit to accumulated depreciation for $59,375. D) A debit to loss on sale for $3,042. E) A credit to gain on sale for $4,979

A debit to loss on sale for $2,625.

A credit sale of $5,275 to a customer would result in which of the following?

A debit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable subsidiary ledger.

An asset's book value is $18,000 on December 31, Year 5. The asset has been depreciated at an annual rate of $3,000 on the straight-line method. Assuming the asset is sold on December 31, Year 5 for $15,000, the company should record:

A loss on sale of $3,000.

A promissory note received from a customer in exchange for an account receivable is recorded by the payee as:

A note receivable.

A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and the length of time past due is the:

Aging of accounts receivable method

Accounts payable are:

Amounts owed to suppliers for products and/or services purchased on credit.

Revenue expenditures:

Are additional costs of plant assets that do not materially increase the asset's life or its productive capabilities.

Land improvements are:

Assets that increase the usefulness of land, but that have a limited useful life and are subject to depreciation.

An asset can be disposed of by all of the following except

Continuing to use it after it is fully depreciated.

Gideon Company uses the direct write-off method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,000 uncollectible account of its customer, A. Hopkins. On July 10, Gideon received a check for the full amount of $2,000 from Hopkins. On July 10, the entry or entries Gideon makes to record the recovery of the bad debt is:

Debit Accounts receivable 2000; Credit Bad debt expense; Debit Cash 2000; Credit Accounts receivable

Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,000 uncollectible account of its customer, A. Hopkins. The entry or entries Gideon makes to record the write off of the account on May 3 is:

Debit Allowance for doubtful accounts 2000; Credit accounts receivable 2000

If a company has advance ticket sales totaling $2,000,000 for the upcoming football season, the receipt of cash would be journalized as:

Debit Cash, credit Unearned Revenue.

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. What is the adjusting entry for the accrued interest at December 31 on the note? (Use 360 days a year.)

Debit Interest Expense, $120; credit Interest Payable, $120.

Employees earn vacation pay at a rate of one day per month. The company estimated and must expense $1,500 of accrued vacation benefits for the year. Which of the following is the necessary year-end adjusting entry to record accrued vacation benefits?

Debit Vacation Benefits Expense $1,500; credit Vacation Benefits Payable $1,500

The modified accelerated cost recovery system (MACRS

Is included in the U.S. federal income tax rules for depreciating assets.

A company paid $150,000, plus a 7% commission and $5,000 in closing costs for a property. The property included land appraised at $87,500, land improvements appraised at $35,000, and a building appraised at $52,500. What should be the allocation of this property's costs in the company's accounting records?

Land $82,750; Land Improvements, $33,100; Building, $49,650

The person who signs a note receivable and promises to pay the principal and interest is the:

Maker

On October 12 of the current year, a company determined that a customer's account receivable was uncollectible and that the account should be written off. Assuming the allowance method is used to account for bad debts, what effect will this write-off have on the company's net income and total assets?

No effect on net income; no effect on total assets.

If the credit balance of the Allowance for Doubtful Accounts account exceeds the amount of a bad debt being written off, the entry to record the write-off against the allowance account results in:

No effect on the expenses of the current period.

All of the following statements regarding liabilities are true except

Potential future wages to be paid to employees should be recorded as liabilities.

A company sold $12,000 worth of bicycles with an extended warranty. The company's experience is that warranty expense averages 2% of sales. The company should:

Recognize warranty expense and liability in the year of the sale.

The quality of receivables refers to:

The likelihood of collection without loss.

The allowance method that assumes a given percent of a company's credit sales for the period is uncollectible is:

The percent of sales method.

The expense recognition principle, as applied to bad debts, requires:

The use of the allowance method of accounting for bad debts.