Questions and Answers of Accounting Principles

Howis the book value of accounts receivable calculated?
What are the two categories of assets?
What three factors are used to calculate a plant asset's annual depreciation expense?
In what column is the Income Summary amount extended?
What extra step is required when a 10-column work sheet is prepared instead of an 8-column work sheet?
Vadillo Lumber currently requires each employee to inform the accounting clerk of the total hours worked each day during the pay period. The total number of hours worked by all employees has been
What account title is used to journalize the Total Earnings column of the payroll register?
What account title is used to journalize the Federal Income Tax column of the payroll register?
What account title is used to journalize the Social Security Tax column of the payroll register?
What account title is used to journalize the Medicare Tax column of the payroll register?
What is the tax rate Hobby Shack must pay on employees for each of the following taxes social security, Medicare, federal unemployment, and state unemployment?
What is the amount of each employee's earnings that is subject to federal and state unemployment taxes at Hobby Shack?
When must employers furnish a W-2 statement to their employees?
What taxes are included in the quarterly federal tax return filed by the employer?
Selmon Company was organized on January 1. During the first year of operations, the following plant asset expenditures and receipts were recorded in random order.Instructions Analyze the foregoing
The financial statements and the Notes to Consolidated Financial Statements of PepsiCo are presented in Appendix A.Instructions Refer to PepsiCo’s financial statements and answer the following
In recent years, Juresic Transportation purchased three used buses. Because of frequent turnover in the accounting department, a different accountant selected the depreciation method for each bus,
In recent years, Escobar Company purchased three machines. Because of heavy turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each
PepsiCo’s financial statements are presented in Appendix A. Coca-Cola’s financial statements are presented in Appendix B.Instructions(a) Compute the asset turnover ratio for each company for
On January 1, 2008, Pele Company purchased the following two machines for use in its production process.Machine A: The cash price of this machine was $$38,000.$ Related expenditures included:sales
At the beginning of 2006, Lehman Company acquired equipment costing $$90,000.$ It was estimated that this equipment would have a useful life of 6 years and a residual value of $$9,000$ at that
On January 1, 2008, Guthrie Company purchased the following two machines for use in its production process.Machine A: The cash price of this machine was $$46,500.$ Related expenditures included:
At the beginning of 2006, Hadaway Company acquired equipment costing $$80,000.$ It was estimated that this equipment would have a useful life of 6 years and a residual value of $$8,000$ at that
Reimer Company and Lingo Company are two proprietorships that are similar in many respects. One difference is that Reimer Company uses the straight-line method and Lingo Company uses the
At December 31, 2008, Jimenez Company reported the following as plant assets.Instructions(a) Journalize the above transactions. The company uses straight-line depreciation for buildings and
At December 31, 2008, Yockey Company reported the following as plant assets.Instructions(a) Journalize the above transactions. Yockey uses straight-line depreciation for buildings and equipment. The
Riggs Co. has delivery equipment that cost $$50,000$ and that has been depreciated $$24,000.$ Record the disposal under the following assumptions.(a) It was scrapped as having no value.(b) It was
Buster Container Company is suffering declining sales of its principal product, non biodegradable plastic cartons. The president, Dennis Harwood, instructs his controller, Shelly McGlone, to lengthen
The intangible assets section of Redeker Company at December 31, 2008, is presented below.The patent was acquired in January 2008 and has a useful life of 10 years. The franchise was acquired in
The intangible assets section of Justen Company at December 31, 2008, is presented below.The patent was acquired in January 2008 and has a useful life of 10 years. The copyright was acquired in
Due to rapid turnover in the accounting department, a number of transactions involving intangible assets were improperly recorded by the Thorne Company in 2008.1. Thorne developed a new manufacturing
Due to rapid turnover in the accounting department, a number of transactions involving intangible assets were improperly recorded by Duby Company in 2008.1. Duby developed a new manufacturing
Gavin Corporation and Keady Corporation, two corporations of roughly the same size, are both involved in the manufacture of canoes and sea kayaks. Each company depreciates its plant assets using the
On January 1, 2008, the ledger of Payless Software Company contains the following li- ability accounts.During January the following selected transactions occurred.Instructions(a) Journalize the
The financial statements of PepsiCo. and the Notes to Consolidated Financial Statements appear in Appendix A.InstructionsRefer to PepsiCo’s financial statements and answer the following questions
Rob Judson Company had the following transactions involving notes payable.July 1, 2008 Borrows $50,000 from Third National Bank by signing a 9-month, 12% note.Nov. 1, 2008 Borrows $60,000 from DeKalb
On January 1, 2008, the ledger of Mane Company contains the following liability accounts.During January the following selected transactions occurred.Instructions(a) Journalize the January
The following are selected transactions of Zimmer Company. Zimmer prepares financial statements quarterly.Instructions(a) Prepare journal entries for the above transactions and ‘events.(b) Post to
PepsiCo’s financial statements are presented in Appendix A. Coca-Cola’s financial PEPSI. statements are presented in Appendix B.Instructions(a) At December 31, 2005, what was PepsiCo’s largest
The following are selected transactions of Winsky Company. Winsky prepares financial statements quarterly.Instructions(a) Prepare journal entries for the above transactions and events.(b) Post to
Hiller Drug Store has four employees who are paid on an hourly basis plus time and a half for all hours worked in excess of 40 a week. Payroll data for the week ended February 15, 2008, are presented
Del Hardware has four employees who are paid on an hourly basis plus time-and-a half for all hours worked in excess of 40 a week. Payroll data for the week ended March 15, 2008, are presented
The following payroll liability accounts are included in the ledger of Pettiegrew Company on January 1, 2008.In January, the following transactions occurred.At January 31, the company also makes the
Maggie Sharrer Company borrows $$88,500$ on September 1, 2008, from Sandwich State Bank by signing an $$88,500,$ 12%, one-year note. What is the accrued interest at December 31, 2008?a.
Guyer Company publishes a monthly sports magazine, Fishing Preview. Subscriptions to the magazine cost $20 per year. During November 2008, Guyer sells 12,000 subscriptions beginning with the December
The following payroll liability accounts are included in the ledger of Armitage Company on January 1, 2008.In January, the following transactions occurred.At January 31, the company also makes the
For the year ended December 31, 2008, R. Uhlman Company reports the following summary payroll data.R. Uhlman Company’s payroll taxes are: FICA 8%, state unemployment 2.5% (due to a stable
For the year ended December 31, 2008, Blasing Electrical Repair Company reports the following summary payroll data.Blasing Company’s payroll taxes are: FICA 8%, state unemployment 2.5% (due to a
Yahoo! Inc.’s 2004 financial statements contain the following selected data (in thousands).Compute the following ratios.(a) Working capital.(b) Current ratio. Current assets $4,090,475 Total assets
Brad Hoey Company is involved in a lawsuit as a result of an accident that took place September 5, 2008. The lawsuit was filed against Brad Hoey on November 1, 2008, and claims damages of
A contingent liability should be recorded in the accounts when:a. it is probable the contingency will happen, but the amount cannot be reasonably estimated.b. it is reasonably possible the
At December 31, Hanes Company prepares an adjusting entry for a product warranty contract. Which of the following accounts is/are included in the entry?a. Miscellaneous Expense.b. Estimated Warranty
Kroger Co.’s 2005 financial statements contained the following selected data (in millions).Instructions Compute these values:(a) Working capital.(b) Current ratio. Current assets $ 6,466 Accounts
Andy Manion earns $$14$ per hour for a 40-hour week and $$21$ per hour for any overtime work. If Manion works 45 hours in a week, gross earnings are:a. $$560.$b. $630.c. $650.d. $665.
The following financial data were reported by 3M Company for 2004 and 2005 (dollars in millions).Instructions(a) Calculate the current ratio and working capital for 3M for 2004 and 2005.(b) Suppose
The department that should pay the payroll is the:a. timekeeping department.b. human resources department.c. payroll department.d. treasurer's department.
The post-closing trial balances of two proprietorships on January 1, 2008, are presented below.Patrick and Samuelson decide to form a partnership, Pasa Company, with the following agreed upon
Which of the following is not an additional fringe benefit?a. Post-retirement pensions.b. Paid absences.c. Paid vacations.d. Salaries.
The post-closing trial balances of two proprietorships on January 1, 2008, are presented below.Free and Will decide to form a partnership, Free-Will Company, with the following agreed upon valuations
The advantages of a partnership do not include:a. ease of formation.b. unlimited liability.c. freedom from government regulation.d. ease of decision making.
At the end of its first year of operations on December 31, 2008, CNU Company’s accounts show the following.The capital balance represents each partner’s initial capital investment. Therefore, net
At the end of its first year of operations on December 31, 2008, the RAF Company’s accounts show the following.The capital balance represents each partner’s initial capital investment. Therefore,
Upon formation of a partnership, each partner's initial investment of assets should be recorded at their:a. book values.b. cost.c. market values.d. appraised values.
The partners in Shawnee Company decide to liquidate the firm when the balance sheet shows the following.The partners share income and loss 5 : 3 : 2. During the process of liquidation, the
At April 30, partners’ capital balances in ANR Company are: Alexander $$49,000.$ Norrison $$26,000,$ and Rothlisberger $$24,000.$ The income-sharing ratios are SES. respectively. On May 1,
Using the data in (4) above, what is B's share of net income if the percentages are applicable after each partner receives a $$10,000$ salary allowance?a.
On December 31, the capital balances and income ratios in the Poker Company are as follows.Instructions(a) Journalize the withdrawal of Jack under each of the following independent assumptions.(1)
O. Guillen (beginning capital, $$60,000)$ and K. Williams (beginning capital $$90,000)$ are partners. During 2008, the partnership earned net income of $$70,000,$ and Guillen made drawings of
Which of the following statements about partnership financial statements is true?a. Details of the distribution of net income are shown in the owners' equity statement.b. The distribution of net
For Starrite Co., beginning capital balances on January 1, 2008, are Gary Stark $$20,000$ and Jim Nyland $$18,000.$ During the year, drawings were Stark $$8,000$ and Nyland $$5,000.$ Net
In the liquidation of a partnership it is necessary to (1) distribute cash to the partners, (2) sell noncash assets, (3) allocate any gain or loss on realization to the partners, and (4) pay
Louisa Santiago purchases 50% of Leo Lemon's capital (SO interest in the K & L partnership for $$22,000.$ If the capital balance of Kate Kildare and Leo Lemon are $$40,000$ and $$30,000,$
Capital balances in the MEM partnership are Mary Capital (SO e $$60,000,$ Ellen Capital $$50,000,$ and Mills Capital $$40,000,$ and income ratios are 5:3: 2, respectively. The MEMO partnership
Capital balances in the MURF partnership are Molly Capital $$50,000,$ Ursula Capital $$40,000,$ Ray Capital $$30,000,$ and Fred Capital $$20,000,$ and income ratios are 4:3:2: 1.
The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2008.1. Paid $$5,000$ of accrued taxes at time plant site was acquired.2. Paid
On March 1, 2008, Penner Company acquired real estate on which it planned to construct a small office building. The company paid $$80,000$ in cash. An old warehouse on the property was razed at a
Younger Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2008, at a cost of $$168,000.$ Over its 4-year useful life, the bus is expected to
Kelm Company purchased a new machine on October 1, 2008, at a cost of $$120,000.$ The company estimated that the machine will have a salvage value of $$12,000.$ The machine is expected to be used
Brainiac Company purchased a delivery truck for $$30,000$ on January 1, 2008. The truck has an expected salvage value of $$2,000,$ and is expected to be driven 100,000 miles over its estimated
Jerry Grant, the new controller of Blackburn Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2008. His findings are as
Presented below are selected transactions at Ingles Company for 2008.Jan. 1 Retired a piece of machinery that was purchased on January 1, 1998. The machine cost $$62,000$ on that date. It had a
Beka Company owns equipment that cost $$50,000$ when purchased on January 1, 2005. It has been depreciated using the straight-line method based on estimated salvage value of $$5,000$ and an
On July 1, 2008, Hurtig Inc. invested $720,000 in a mine estimated to have 800,000 tons of ore of uniform grade. During the last 6 months of 2008, 100,000 tons of ore were mined and
The following are selected 2008 transactions of Franco Corporation.Jan. 1 Purchased a small company and recorded goodwill of $150,000. Its useful life is indefinite.May 1 Purchased for $90,000 a
Herzogg Company, organized in 2008, has the following transactions related to intangible assets.Instructions Prepare the necessary entries to record these intangibles. All costs incurred were for
During 2008 Nasra Corporation reported net sales of $$4,900,000$ and net income of $$1,500,000.$ Its balance sheet reported average total assets of $$1,400,000.$Instructions Calculate the asset
Coran's Delivery Company and Enright's Express Delivery exchanged delivery trucks on January 1, 2008. Coran's truck cost $$22,000.$ It has accumulated depreciation of $$15,000$ and a fair market
Ecklund Company purchased land and a building on January 1, 2008. Management’s best estimate of the value of the land was $$100,000$ and of the building $$200,000.$ But management told the
On January 1, 2008, the Ramirez Company ledger shows Equipment $$29,000$ and Accumulated Depreciation $$9,000.$ The depreciation resulted from using the straight-line method with a useful life of
Chan Company sells office equipment on September 30, 2008, for $$20,000$ cash. The office equipment originally cost $$72,000$ and as of January 1, 2008, had accumulated depreciation of
Galena Company purchases a patent for $$120,000$ on January 2, 2008. Its estimated useful life is 10 years.(a) Prepare the journal entry to record patent expense for the first year.(b) Show how
Information related to plant assets, natural resources, and intangibles at the end of 2008 for Spain Company is as follows: buildings $$1,100,000;$ accumulated depreciation—buildings
In its 2005 annual report Target reported beginning total assets of $$32.2$ billion; ending total assets of $$35.0$ billion; property and equipment (net) of $$19.4$ billion; and net sales of
What is a payroll?
How many hours were worked by a Hobby Shack employee who arrived at 8:29 and departed at 12:27?
How does Hobby Shack calculate overtime earnings?
What are the total earnings of a Hobby Shack employee who worked 44 hours in a week and earns $11.00 per hour?
Where does an employer get the information used to determine the amount of federal income tax to withhold from employees’ earnings?
Employee federal income tax withholdings are based on what two factors?
Does the employer or employee pay social security tax and Medicare tax?

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