BUS 1A Pretest #4
A company has 45,000 shares of common stock outstanding. The stockholders' equity applicable to common shares is $540,000, and the par value per common share is $10. The book value per share is:
$12.00. Book Value per Share = Stockholders' Equity Applicable to Common/Common Shares OutstandingBook Value per Share = $540,000/45,000 shares = $12.00 per shares
Portia Grant is an employee who is paid monthly. For the month of January of the current year, she earned a total of $9,288. The FICA tax for social security is 6.2% of the first $128,400 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The FUTA tax rate of 0.6% 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 $1,541.17. What is the total amount of taxes withheld from the Portia's earnings? (Round your intermediate calculations to two decimal places.)
$2,251.71 Total Taxes = Federal Income Tax + FICA-SS Tax + FICA-Medicare TaxTotal Taxes = $1,541.17 + $575.86* + $134.68** = $2,251.71*FICA-SS Tax $9,288.00 × 0.062 = $575.86**FICA-Medicare Tax $9,288.00 × 0.0145 = $134.68
Morgan Company issues 9%, 20-year bonds with a par value of $650,000 that pay interest semiannually. The amount paid to the bondholders for each semiannual interest payment is.
$29,250. $650,000 × 0.09 × ½ year = $29,250
On January 1, a company issued and sold a $300,000, 5%, 10-year bond payable, and received proceeds of $293,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The carrying value of the bonds immediately after the first interest payment is:
$293,350 Discount amortized = ($300,000 - $293,000)/20 = $350Carrying Value = $300,000 bond payable less $6,650 unamortized discount ($7,000 − $350).
An employee earned $43,500 working for an employer in the current year. The current rate for FICA Social Security is 6.2% payable on earnings up to $128,400 maximum per year and the rate for FICA Medicare 1.45%. The employer's total FICA payroll tax for this employee is:
$3,327.75. Employer's Total FICA Tax = $43,500 × (0.062 + 0.0145) = $3,327.75
An employee earned $46,400 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:
$3,549.60 FICA Taxes = Wages × (FICA tax rate + Medicare tax rate)FICA Taxes = $46,400 × (0.062 + 0.0145) = $3,549.60
ayan Company had net income of $33,670. The weighted-average common shares outstanding were 9,100. The company has no preferred stock. The company's earnings per share is
$3.70. Earnings per Share = (Net Income − Preferred Dividends)/Weighted-Average Common Shares OutstandingEarnings per Share = ($33,670 − $0) / 9,100 = $3.70
A company issued 230 shares of $100 par value common stock for $27,400 cash. The total amount of paid-in capital in excess of par is:
$4,400. Cash $27,400 − Par Value (230 × $100) = Paid-in capital in excess of par $4,400
The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both taxes are applied to the first $7,000 of an employee's pay. Assume that an employee earned total wages of $10,500. What is the amount of total unemployment taxes the employer must pay on this employee's wages?
$420.00 Unemployment Taxes = $7,000 × (0.006 + 0.054); Unemployment Taxes = $420.00
A company had a beginning balance in retained earnings of $43,300. It had net income of $6,300 and declared and paid cash dividends of $5,700 in the current period. The ending balance in retained earnings equals:
$43,900. Beginning balance $43,300 Plus net income $6,300 Less dividends ($5,700) Ending balance $43,900
Portia Grant is an employee who is paid monthly. For the month of January of the current year, she earned a total of 8,638. 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 0.6% 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 $1,433.27. Her net pay for the month is: (Round your intermediate calculations to two decimal places.)
$6,543.92 Net Pay = Gross Pay − Federal Income Tax − FICA-SS Tax − FICA-Medicare TaxNet Pay = $8,638 − $1,433.27 − $535.56* − $125.25** = $6,543.92*FICA-SS Tax $8,638 × 0.062 = $535.56**FICA-Medicare Tax $8,638 × 0.0145 = $125.25
Torino Company has 2,200 shares of $50 par value, 7.0% cumulative and nonparticipating preferred stock and 22,000 shares of $10 par value common stock outstanding. The company paid total cash dividends of $7,500 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is:
$7,900. Preferred stock dividend: 2,200 shares × $50/share × 7.0% = $7,700Prior year: Dividend paid = $7,500; $200 in arrearsCurrent year: $200 in arrears + $7,700 current dividend = $7,900
Charger Company's most recent balance sheet reports total assets of $33,125,000, total liabilities of $19,875,000 and total equity of $13,250,000. The debt to equity ratio for the period is (rounded to two decimals):
1.50 $19,875,000/$13,250,000 = 1.50
A company has earnings per share of $9.10. Its dividend per share is $1.30, its market price per share is $109.20, and its book value per share is $85. Its price-earnings ratio equals:
12.00. Price-Earnings Ratio = Market Price per Share/Earnings per SharePrice-Earnings Ratio = $109.20/$9.10 = 12.00
The following data were reported by a corporation: Authorized shares -27,000 Issued shares-22,000 Treasury shares-7,000 The number of outstanding shares is:
15,000. Issued Shares − Treasury Shares = Outstanding Shares22,000 − 7,000 = 15,000
A company paid $0.55 in cash dividends per share. Its earnings per share is $2.55, and its market price per share is $26.25. Its dividend yield equals:
2.1%. Dividend Yield = Cash Dividends per Share/Market Price per ShareDividend Yield = $0.55/$26.25 = 2.1%
A company's income before interest expense and income taxes is $125,000 and its interest expense is $55,000. Its times interest earned ratio is:
2.27 Times Interest Earned Ratio = Income before Interest Expense and Income Taxes/Interest ExpenseTimes Interest Earned Ratio = $125,000/$55,000 = 2.27
A company paid $0.64 in cash dividends per share. Its earnings per share is $4.36 and its market price per share is $28.00. Its dividend yield equals:
2.29% Dividend Yield = Cash Dividends per Share/Market Price per ShareDividend Yield = $0.64/$28.00 = 2.29%
A corporation sold 19,000 shares of its $10 par value common stock at a cash price of $13 per share. The entry to record this transaction would include:
A credit to Common Stock for $190,000. Debit Cash-$247,000 Credit Common Stock, $10 Par Value -$190,000 Credit Paid-in Capital in Excess of Par Value, Common Stock -$57,000
Adonis Corporation issued 10-year, 7% bonds with a par value of $220,000. Interest is paid semiannually. The market rate on the issue date was 6%. Adonis received $236,371 in cash proceeds. Which of the following statements is true?
Adonis must pay $220,000 at maturity plus 20 interest payments of $7,700 each. $220,000 × 7% × ½ = $7,700 each interest payment
On January 1, a company issued and sold a $409,000, 6%, 10-year bond payable, and received proceeds of $404,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The journal entry to record the first interest payment is:
Debit Bond Interest Expense $12,520; credit Cash $12,270; credit Discount on Bonds Payable $250. Cash = $409,000 × .06 × 1/2 = $12,270Discount amortized = ($409,000 − $404,000)/20 = $250Interest expense = $12,270 + $250 = $12,520
On January 1, a company issues bonds dated January 1 with a par value of $370,000. The bonds mature in 5 years. The contract rate is 11%, and interest is paid semiannually on June 30 and December 31. The market rate is 10% and the bonds are sold for $384,280. The journal entry to record the first interest payment using straight-line amortization is: (Rounded to the nearest dollar.)
Debit Bond Interest Expense $18,922; debit Premium on Bonds Payable $1,428; credit Cash $20,350. Cash payment = $370,000 × 0.11 × ½ = $20,350Premium Amortization = $384,280 − $370,000 = $14,280/10 = $1,428Interest Expense = $370,000 × 0.11 × ½ = $20,350 − $1,428 = $18,922
On January 1, Parson Freight Company issues 7.5%, 10-year bonds with a par value of $2,600,000. The bonds pay interest semiannually. The market rate of interest is 8.5% and the bond selling price was $2,423,327. The bond issuance should be recorded as:
Debit Cash $2,423,327; debit Discount on Bonds Payable $176,673; credit Bonds Payable $2,600,000.
Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $953,000 to be paid during January of the following year. The journal entry on December 31 to record the bonuses is:
Debit Employee Bonus Expense $953,000; credit Bonus Payable $953,000.
On January 1, a company issues bonds dated January 1 with a par value of $490,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $470,146. The journal entry to record the first interest payment using straight-line amortization is:
Debit Interest Expense $19,135.40; credit Discount on Bonds Payable $1,985.40; credit Cash $17,150.00. Cash payment of interest = $490,000 × .07 × ½ = $17,150Discount Amortization = ($490,000 − $470,146)/10 = $1,985.40Interest Expense = $17,150 + $1,985.40 = $19,135.40
On November 1, Alan Company signed a 120-day, 10% note payable, with a face value of $13,500. What is the adjusting entry for the accrued interest at December 31 on the note? (Use 360 days a year.)
Debit Interest Expense, $225; credit Interest Payable, $225. Interest Expense = Principal × Interest Rate × TimeInterest Expense = $13,500 × 0.10 × 60/360 = $225
On November 1, Alan Company signed a 120-day, 9% note payable, with a face value of $54,000. Alan made the appropriate year-end accrual. What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made? (Use 360 days a year.)
Debit Notes Payable $54,000; debit Interest Payable $810; debit Interest Expense $810; credit Cash $55,620. Interest Expense = Principal × Interest Rate × TimeInterest Expense = $54,000 × 0.09 × 60/360; Interest Expense = $810 (debit to Interest Expense)Interest Payable = Principal × Interest Rate × TimeInterest Payable = $54,000 × 0.09 × 60/360; Interest Payable = $810 (debit to Interest Payable)Maturity Value = Principal + Interest ExpenseMaturity Value = $54,000 + $1,620 = $55,620 (credit to Cash)
Hutter Corporation declared a $0.50 per share cash dividend on its common shares. The company has 27,000 shares authorized, 13,200 shares issued, and 10,800 shares of common stock outstanding. The journal entry to record the dividend declaration is:
Debit Retained Earnings $5,400; credit Common Dividends Payable $5,400.
Hutter Corporation declared a $0.50 per share cash dividend on its common shares. The company has 40,000 shares authorized, 21,000 shares issued, and 16,000 shares of common stock outstanding. The journal entry to record the dividend declaration is:
Debit Retained Earnings $8,000; credit Common Dividends Payable $8,000. $0.50 × 16,000 shares = $8,000
Athens Company's salaried employees earn two weeks of vacation per year. The company estimated and must expense $10,600 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 $10,600; credit Vacation Benefits Payable $10,600.
A company estimates that warranty expense will be 3% of sales. The company's sales for the current period are $223,000. The current period's entry to record the warranty expense is:
Debit Warranty Expense $6,690 credit Estimated Warranty Liability $6,690. Warranty Expense = Sales × Estimated Warranty PercentageWarranty Expense = $223,000 × 0.03 = $6,690
On September 1, Ziegler Corporation had 52,000 shares of $5 par value common stock, and $156,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. The general journal entry to record this transaction is
No entry is made for this transaction.
A bond's par value is not necessarily the same as its market value
true
The carrying value of a bond is computed as the face value minus any unamortized discount or plus any unamortized premium
true
