award:

1. 10 out of
10.00
.............. points ·
On September 11, 20 12, Home Store sells a mower for $500 with a one-year warran~/ that covers
parts. Warran~/ expense is estimated at 8% of sales. On July 24, 20 13, the mower is brought in for
repairs covered under the warran~/ requiring $35 in materials taken from the Repair Parts Inventory.

Prepare the September 11, 20 12, entry to record the mower sale, and the July 24, 20 13, entry to record
the warran~/ repairs. (Assume all sales are cash sales and Home store uses a periodic inventory
system and estimated warranty expense is re corded at the time of the sale.}

Date General Journal Debit Credit

Sep 11 , 20 14 Cash ./ 500./
Sales ./ 500./

Sep 11 , 20 14 Warranty expense ./ 40./

Estimated warranty liability ./ 40./

Jul24,20 13 Estimated warranty liability ./ 35./

Repair parts inventory ./ 35./
 g.vard:

2. 10 out of
10.00
·· · · · · · points · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · .. ·
BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $11 0, 100 paid to its
employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.8% and
SUTA taxes are 2.9% of the first $7,000 paid to its employee.

Gross Pay through August Gross Pay for September

a. $ 6,400 $ 800

Prepare the employer's September 30 journal entry to record salary expense and its related payroll
liabilities for this employee. The employee's federal income taxes withheld by the employer are $80 for
this pay period. (Round your answers to 2 decimal p laces.)

Taxes to be withheld from gross pay (Employee-paid taxes)

September earnings
subiectto tax Tax Rate Tax Amount

Federal income tax

1 _J$ 80.00
FICA-Social Security 800 oo.; 6 20%.i 49.60

FICA-Medicare 800 .oo.; 1.45%.il 11.60

Total taxes withheld 1$ 141.20
·~~~~~~~~---'

Date General Journal Debit Credit

Sep. 30 Salaries expense 800.00.;j

- FICA- Social sec. taxes payable ""

""
49.60.i
FICA- Medicare taxes payable 11 60.i
Employee fed. inc. taxes payable "" 80.00.i
Accrued payroll payable "" 658.80.i
-
 eward:

3. 10 out of
10.00
..............points ...................................................... ..
Ticketsales, Inc., receives $5,000,000 cash in advance ticket sales for a four-Oate tour of Bon Jovi.
Record the advance ticket sales on October 3 1. Record the revenue earned for the first concert date of
November 5, assuming it represents one-fou rth of the advance ticket sales. (Assume the company has
the policy of recording cash received in advance in the balance sheet account.)

Date General Journal Debit Credit

Oct.31 Cash ./ 5,000,000./
Unearned ticket revenue ./ 5,000,000./

T I I
Nov.5 Unearned ticket revenue ./ 1,250,000./
Earned ticket revenue ./ 1,250,000./
-
 tfii iitiiiioiliili'i iii!iiriniioiiii iiiipiiii s io oi ii iiuiis°&oiis iJisiJiarii ifiiiiiOwr
Keesha Co. borrows $200,000 cash on November 1, 20 13, by signing a 90-day, 9% note with a face
value of $200,000.

sward:
4. 10 out of
10.00
·····························poinrs ·············································································································
1. On what date does this note mature?

0 January 25, 20 14.

<::>January 26, 20 14.
0 January 27, 20 14.
0 January 28, 20 14.
@January 30, 20 14.
 award:
5. 20 out of
20.00 .....................................................................................
.....................points
2. & 3. What is the amount of interest expense in 20 13 and 20 14 from this note? (Use 360 days a
year. Do not round intermediate cal'culations.)

Interest Interest
Total through Expense Expense
maturity
2013 2014

Principal $ 200,000./ $ 200,000./ $ 200,000./

Rate (%) 9%./ 9%./ 9%./
Time 90/360./ 60/360./ 30/360./
Total interest $ 4,500./ $ 3,000./ $ 1,500./
 6. 10 out of
10.00
·····························poinr!r ···························································································································
4(a)Prepare journal entry to record issuance of the note on November 1, 2013.

Date 11 General Journal Debit Credit

1--N_ov. 1 _ Jcash 200,000.,i
Notes payable 200,000.,i
--~~

4(b)Prepare journal entry to record accrual of interest at the end of 20 13.

Date General Journal Debit Credit

Dec. 31 Interest expense .I 3,000.,i
Interest payable 3,000.,i

4(c) Prepare journal entry to record payment of tl1 e note at maturity, assuming no reversing entries were
made on January 1.

Date General Journal Debit Credit

Jan. 30 Notes payable .I 200,000.,i
Interest payable .I 3,000.,i
Interest expense .I 1,500.,i
Cash .I 204,500./
 award:
7. 10 out of
10.00
·····························points ·
The following legal claims exist for Huprey Co. Identify the accounting treatment for each claim as
either (a) a l iab i l i ~/ that is recorded or (b) an i tem described in notes to its financial statements.

1. Huprey (d efendant) estimates that a pending lawsuit could result in damages of $1,250,000; it is
reasonably possible t11at the plaintiff will win the case.

0 A liability that is recorded.

@An item described in notes to its financia l statements.

2. Huprey faces a probable loss on a pending lawsuit; the amount is not reasonably estimable.

® An item described in notes to its financia l statements.

0 A liability that is recorded.

3. Huprey estimates damages in a case at $.3,500,000 with a high pro bability of losing the case.

® A liability that is recorded.

0 An item d escribed in notes to its financi.al statements.
 award:
8. 10 out of
10.00
· ............ ·poii'its " .........................................................................................................................................................
BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $11 0, 100 paid to its
employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.8% and
SUTA taxes are 2.9% of the first $7,000 paid to its employee.

Gross Pay for

Gross Pay through August
September
a. $ 6,400 $ 800
b. 18,200 2,100
c. 103,800 8,000

Compute BMX's amounts for each of these four taxes as applied to the employee's gross earnings for
September under each of three separate situations (a), (b), and (c). (Round your answers to 2 decimal
places.)

)
September earnings
ax subject to tax Tax Rate Tax Amount .J
FICA-Social Security $ 800.00.,I 620%,,l $ 49.60 I
FICA-Medicare 800.00.,I 1.45%.,I 11.60
+--

~
600.00.,I 0.80 %.,I 4.80
600.00.,I 2.90%.,I 17.40
)
September earnings ..
ifax subject to tax Tax Rate Tax Amount

FICA-Social Security
....
$ 2,1 00.00.,I
.... 6.20%
-
$ 130.20
I
FICA-Medicare 2,1 00.00.,I 1.45% 30.45
I
~ I
0.00.,I
-
A 0.00.,I
I
c)
September earnings
ifax subject to tax Tax Rate Tax Amount

- FICA-Social Security
FICA-Medicare
$ 6,300.00.,I
8,000.00.,I - 6.20%
1.45%
$ 390.60
116.00
I
~UTA 0.00.,I
SUTA 0.00.,I
 award:
9. 10 out of
10.00
·····························poiiits ·
Noura Company offers an annual bonus to employees if the company meets certain net income goals.
Prepare the journal entry to record a $15,000 bonus owed to its workers (to be shared equally) at
calendar year-end.

Date General J ournal Debit Credit

Dec. 31 Employee bonus expense 15,000./
Bonus payable 15,000./
-~~~ -~--
 award:
10. 10 out of
10.00
·· ..............poifits ....
On Januar/ 15, the end of the first biweekly pay period of the year, North Company's payroll register
showed that its employees earned $35.00 O of sales salaries. Withholdings from the employees'
salaries include FICA Social S e curi~/ taxes at the rate of 6.2%, FICA Medicare taxes at the rate of
1.45%, $6,500 of federal income taxes, $772.50 of medical insurance deductions, and $120 of union
dues. No employee earned more than $7,000 in this first period.

Prepare the journal entry to record North Company's January 15 (employee) payroll expenses and
liabilities. (Round your answers to 2 decima I places.)

Date General Journal Debit Credit

Jan. 15 Sales salaries expense ./ 35,000.00./
FICA- Medicare taxes payable ./ 507.50./
FICA- Social sec. taxes payable ./ 2, 170.00./
Employee medical insurance payable ./ 772.50./
Employee union dues payable ./ 120.00./
Employee fed. inc. taxes payable ./ 6,500.00./
Salaries payable ./ 24,930.00./
 award:
11 . 10 out of
10.00
..............poir'its ...............................................................
Nishi Corporation prepares financial statements for each month-end. As part of its accounting pro cess,
estimated income taxes are accrued each month for 30% of the current month's net income. The
income taxes are paid in the first month of each quarter for the amount accrued for the prior quarter.
The following information is available for the fourth quarter of year 20 13. When tax computations are
completed on January 20, 2014, Nishi determine s that the quarter's Income Taxes Payable account
balance should be $28,300 on December 31, 20 13 (its unadjusted balance is $24,690).

October 20 13 net income $28,600

November 20 13 net income 19, 100
December 20 13 net income 34,600

1. Determine the amount of the accounting adjustment (dated as of December 31, 20 13) to produce
the proper ending balance in the Income Taxes Payable account.

uni of accounting adjustment $ 3,610./

.....~~~~__;;.....;~~~~

2(a)Prepare journal entry to record the December 31, 20 13, adjustment to the Income Taxes Payable
account.

Date General Journal Debit Credit

Dec. 31 Income taxes expense .I 3,6 10./
Income taxes payable .I 3,610./

2(b)Prepare journal entr1 to record the January 20, 20 14, payment of the fourth-quarter taxes.

Date General Journal Debit Credit

1Income
Jan. 20 taxes payable .I 28,300./l -
.I
-
Cash
---- 28,300./
 award:
12. 10 out of
10.00

On November 7, 20 13, Mura Company borrows $160,000 cash by signing a 90-<iay, 8% note payable
with a face value of $160,000. (Do not round your intermediate calculations.)

1. Compute the accrued interest payable on December 31, 20 13.

Principal x Rate x Time = Interest

Total through maturity $ 160,000vl 8%vl 901360 vi $ 3,200vl
Year end interest accrual $ 160,000vl 8%vl 54/360 vi $ 1,920vl
Interest recognized February $ 160,000vl 8%vl 36/360 vi $ 1,280vl
LL

2. Prepare the journal entry to record the accrue d interest expense at December 31, 20 13.

,...~~~~~~
Date .....
~~~~
General Journal Debit Credit
Dec 31, 20 13 Interest expense vi 1,920J
Interest payable vi 1,920vl
-~--

3. Prepare the journal entr/ to record paymen t of the note at maturity. (Assume no reversing entries
were made.)

Date General Journal Debit Credit

Feb 05, 20 14 Interest payable vi 1,920vl
Interest expense vi 1,280vl
Notes payable vi 160,000vl
Gash vi 163,200vl
 sward:
13 . 10 out of
10.00
.............................points ...
Sera Corporation has made and recorded its quarterly income tax payments. After a final review of
taxes for the year, the company identifies an additional $40,000 of income tax expense that should be
record ed. A portion of this additional expense, $6,000, is d eferred for payment in future years.

Prepare a journal entr/ to record Sera's year-end adjusting entry for income tax expense.

Date General Journal Debit Credit

Dec. 31 Income taxes expense ./ 40,000./
Income taxes payable ./ 34,000./
Deferred income tax liability ./ 6,000./
 award:

14. 10 out of
10.00

Compute the times interest earned for Park Company, which reports income before interest expense
and income taxes of $1,885,000, and interest expense of $145,000.

Tines interest earned

Choose Numerator: Choose Denominator: Tmes interest earned
Income before interest and inc tax ./ Interest expense ./ = Times interest earned
---t
$ 1,885,000./ $ 145,000./ = 13 times
 award:
15. 10 out of
10.00
·· ··· · · · · points · · · · · · · · · · · · · · · · · · · · · · · · · · · ...
The payroll records of Speedy Software show the following information about Marsha Gottschalk, an
employee, for the weekly pay period ending September 30, 20 13. Gottschalk is single and claims one
allowance. Compute her Social S e curi~/ tax (6.2%), Medicare tax (1 .45%), federal income tax
withholding, state income tax (1 .0%), and net pay forthe current pay period. (Use the withholding table
in Exn;M 11A6) (Round your intermediate calculations and final answers to 2 decimal places.)

Total (gross) earnings for current pay period $ 740

Cumulative earnings of previous pay periods 9,700

Gross pay $ 740.00.,I

Social security tax deduction $ 45.88./
Medicare tax deduction 10.73.,I
Federal income tax deduction 96 .00.,I
State income tax deduction 7.40.,I
Total deductions 160.01
Net pay
r $ 579.99
 sward:
16. 10 out of
10.00
·· · .... · · ·points · · · · · · · · · · · · · · · · · · · · · · · · · · · .. ·
The following items appear on the balance sheet of a company with a two-month operating cycle.
Identify the proper classification of each item as follows: C if it is a current liability, L if it is a long-term
liabili~/, or N if it is not a liabili~/.

Classification Item
1. Notes payable (due in 120 days). c .I
2. Notes payable (mature in five years). L .I
3. Notes payable (due in 6 to 12 months). c .I
4. Current portion of long-term debt. c .I
5. Notes payable (due in 13 to 24 months). L .I
6. Sales taxes payable. c .I
7. Accounts receivable. N .I
8. Wages payable. c .I
9. FUTA taxes payable. c .I
10. Salaries payable. c .I
 sward:

17 . 10.00
10 out of
·····························pointir- ·
Listed below are a few transactions and events •Of Piper Company.

a. Piper Company records an adjusting entry for $10,000,000 of previously unrecorded cash sales
(costing $5,000,000) and its sales taxes at a rate of 4%.
b. The company earned $50,000 of $125,000 previously received in advance for services.

Prepare any necessary adjusting entries at December 31, 20 13, for Piper Company's year-end
financial statements for each of the above separate transactions and events. (Piper has the policy of
recording cash received in advance in balance sheet accounts.)

ransaction General Journal Debit Credit

a. Cash ./ 10,400,000./
Sales ./ 10,000,000./
Sales taxes payable ./ 400,000./

a. Cost of goods sold ./ 5,000,000./

Merchandise inventor/ ./ 5,000,000./

b. Unearned services revenue ./ 50,000./

Earned services revenue ./ 50,000./ •
• •
 award:
18. 10 out of
10.00
· ··············points ········································································································································
Merger Co. has ten employees, eac11 of whom earns $2,000 per month and has been employed since
Januar/ 1. FICA Social Securi~/ taxes are 6.2% of the first $11 0,100 paid to each employee, and FICA
Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.8% and SUTA taxes are 5.4% of the first
$7,000 paid to each employee.
Prepare the March 31 journal entry to record the March payroll taxes expenses.

Date General Journal Debit Credit

Mar. 31 Payroll taxes expense .I 2,770.00./
FICA- Medicare taxes payable .I 290.00./
FICA- Social sec. taxes payable .I 1,240.00./
Federal unemployment taxes payable .I 160.00./
State unemployment taxes payable .I 1,080.00./
 a'Ward:
19 • 10outof
10.00
·· ·· ·· ·· ·· ·· ·· points ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· · ·
Which of the following items are normally classified as a current liability for a company that has a 15-
month operating cycle? (Select all that apply .)
a 13 Note payable due in ·18 months.

a 13 Mote payable maturing in 2 years.

a 13 Portion of long- term note due in 15 months.

a 13 Salaries payable.

a 13 FICA taxes payable.

a 13 Mote payable due in 11 months.

 award:
20. 10 out of
10.00
· · · · · · ··poii'its · · · · · · · · · · · · · · · · · · · · · · · · · · · ·· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ·
Dextra Computing sells merchandise for $6 ,000 cash on September 30 (cost of merchandise is
$3,900). The sales tax law requires Dextra to collect 5% sales tax on every dollar of merchandise sold.
Record the entry for the $6,000 sale and its applicable sales tax. Also record the entry that shows the
remittance of the 5% tax on this sale to the state government on October 15.

Date General Journal Debit Credit

Sep 30 Cash ./ 6,300.,I
Sales ./
Sales taxes payable ./

Sep 30 Cost of goods sold 3,900./

Merchandise inventory

Oct. 15 Sales taxes payable 300./

Cash
.................................... ~.
 award:
21 . 10 out of
10.00

Use the following information from separate companies a through f :

Net Income (Loss) Interest Expense Income Taxes
a. $ 115,000 $44,000 $ 35,000
b. 110,000 16,000 50,000
c. 100,000 12,000 70,000
d. 235,000 14,000 130,000
e. 59,000 14,000 30,000
f. (5,000) 10,000 0

Compute times interest earned.

Tines interest earned ratio

Company Choose Nwnerator: II I Choose Denominator: = Ratio
Income before interest & taxes ./ I IInterest expense ./ =
>- .
a
b
$ 194,000./
176,000./
I
I
$ 44,000./
16,000./ - =
=
4.4 1
11.00
c
d
182,000./
379,000./
I
I
12,000./
14,000./
=
=
- - 15.17
270; _ j
e
f
103,000./
5,000./
I 14,000./1 =1 -
1 0,000./~
7 ~~
0.50

Which company indicates the strongest ability to pay interest expense as it comes due?

O company a
O company b
O company c
@company d
O company e
O company f
 oward:

22 . 10.00
10 out of
....................i>oiiits ..........................................................................................................................................................................................................
Chavez Co.'s salaried employees earn four weeks vacation per year. It pays $3 12,000.00 in total
employee salaries for 52 weeks but its employees work only 48 weeks. This means Chavez's total
weekly expense is $6,500 ($3 12,000/48 weeks) instead of the $6,000 cash paid weekly to the
employees ($3 12,000/52 weeks).

Prepare the journal entry to record Chavez's weekly vacation benefits expense.

Event
1 Vacation benefits expense
Vacation benefits payable
General Journal Debit
500./
____
Credit
----< _,
500./
-