Intermediate Accounting Exam 4 Practice
Muggs Co. includes one coupon in each bag of dog food it sells. In return for eight coupons, customers receive a leash. The leashes cost Muggs $4 each. Muggs estimates that 45 percent of the coupons will be redeemed. Data for 2017 and 2018 are as follows:The premium liability at December 31, 2018 is $30,000. $52,500. $60,000. $112,500.
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On August 5, 2018, Famous Furniture shipped 40 dining sets on consignment to Furniture Outlet, Inc. The cost of each dining set was $350 each. The cost of shipping the dining sets amounted to $1,800 and was paid for by Famous Furniture. On December 30, 2018, the consignee reported the sale of 30 dining sets at $850 each. The consignee remitted payment for the amount due after deducting a 6% commission, advertising expense of $600, and installation and setup costs of $780. The total profit on units sold for the consignor is $22,590 $10,740 $12,090 $19,890
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A company gives each of its 75 employees (assume they were all employed continuously through 2017 and 2018) 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 2017, they made $21 per hour and in 2018 they made $24 per hour. During 2018, 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 2017 and 2018 balance sheets, respectively? $151,200; $210,600 $172,800; $216,000 $151,200; $216,000 $172,800; $210,600
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A company offers a cash rebate of $2 on each $6 package of batteries sold during 2018. Historically, 10% of customers mail in the rebate form. During 2018, 5,000,000 packages of batteries are sold, and 175,000 $2 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2018 financial statements dated December 31? $1,000,000; $1,000,000 $1,000,000; $650,000 $650,000; $650,000 $350,000; $650,000
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Bella Pool Company sells prefabricated pools that cost $80,000 to customers for $144,000. The sales price includes an installation fee, which is valued at $20,000. The fair value of the pool is $128,000. The installation is considered a separate performance obligation and is expected to take 3 months to complete. The transaction price allocated to the pool and the installation is $124,541 and $19,459 respectively $144,000 and $20,000 respectively $128,000 and $20,000 respectively $110,702 and $17,298 respectively
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Botanic Choice sells natural supplements to customers with an unconditional sales return if they are not satisfied. The sales returns period extends 60 days. On February 10, 2018, a customer purchases $4,000 of products (cost $2,000). Assuming that based on prior experience, estimated returns are 20%. The journal entry to record the actual return of $250 of merchandise includes a credit to Allowance for Sales Returns for $250. credit to Returned Inventory for $125. debit to Returned Inventory for $125. debit to Estimated Inventory Returns for $125.
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Day Company purchased a patent on January 1, 2017 for $640,000. The patent had a remaining useful life of 10 years at that date. In January of 2018, Day successfully defends the patent at a cost of $288,000, extending the patent's life to 12/31/29. What amount of amortization expense would Day record in 2018? $64,000 $72,000 $77,000 $96,000
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During 2016, Rao Co. introduced a new line of machines that carry a three-year warranty against manufacturer's defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of sale, 3% in the year after sale, and 4% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows: (assume the accrual method)What amount should Rao report as a liability at December 31, 2018? $0 $71,000 $84,000 $319,000
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Floyd Company purchases Haeger Company for $2,400,000 cash on January 1, 2018. The book value of Haeger Company's net assets, as reflected on its December 31, 2017 balance sheet is $1,860,000. An analysis by Floyd on December 31, 2017 indicates that the fair value of Haeger's tangible assets exceeded the book value by $180,000, and the fair value of identifiable intangible assets exceeded book value by $135,000. How much goodwill should be recognized by Floyd Company when recording the purchase of Haeger Company? $ -0- $540,000 $360,000 $225,000
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Hall Co. incurred research and development costs in 2018 as follows:The amount of research and development costs charged to Hall's 2018 income statement should be $2,000,000. $2,200,000. $2,725,000. $5,000,000.
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Jeff Corporation purchased a limited-life intangible asset for $375,000 on May 1, 2016. It has a useful life of 10 years. What total amount of amortization expense should have been recorded on the intangible asset by December 31, 2018? $ -0- $75,000 $100,000 $112,500
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Malrom Manufacturing Company acquired a patent on a manufacturing process on January 1, 2017 for $5,000,000. It was expected to have a 10 year life and no residual value. Malrom uses straight-line amortization for patents. On December 31, 2018, the future cash flows expected from the patent were $400,000 per year for the next eight years. The present value of these cash flows, discounted at Malrom's market interest rate, is $2,400,000. At what amount should the patent be carried on the December 31, 2018 balance sheet? $5,000,000 $4,000,000 $3,200,000 $2,400,000
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On December 31, 2017, Isle Co. has $6,000,000 of short-term notes payable due on February 14, 2018. On January 10, 2016, 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, 2018, 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, 2017 balance sheet which is issued on March 5, 2018 is $0. $900,000. $1,500,000. $2,400,000.
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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.The amount of sales taxes payable (to the nearest dollar) to the state for the month of May is $37,719. $48,363. $62,286. $51,750.
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The total payroll of Trolley Company for the month of October, 2017 was $960,000, of which $180,000 represented amounts paid in excess of $118,500 to certain employees. $600,000 represented amounts paid to employees in excess of the $7,000 maximum subject to unemployment taxes. $180,000 of federal income taxes and $18,000 of union dues were withheld. The state unemployment tax is 1%, the federal unemployment tax is .8%, and the current F.I.C.A. tax is 7.65% on an employee's wages to $118,500 and 1.45% in excess of $118,500. What amount should Trolley record as payroll tax expense? $87,360. $79,560. $68,760. $73,440.
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