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principles of accounting volume 1

Questions and Answers of Principles Of Accounting Volume 1

Nido Co. has a standing agreement with a supplier for purchasing car parts. The terms of the agreement are 3/15, n/30 from the invoice date of September 1. The company makes a purchase on September 1
If Bergen Air Systems takes out a $100,000 loan, with eight equal principal payments due over the next eight years, how much will be accounted for as a current portion of a noncurrent note payable
Elegant Electronics sells a cellular phone on September 2 for $450. On September 6, Elegant sells another cellular phone for $500. Sales tax is computed at 3.5% of the total sale. Prepare journal
Roundhouse Tools has several potential warranty claims as a result of damaged tool kits. Review each situation and (1) determine the treatment for each situation as probable and estimable, probable
Monster Drinks sells twenty-four cases of beverages on October 18 for $120 per case. On October 25, Monster sells another thirty-five cases for $140 per case. Sales tax is computed at 4% of the total
A client pays cash in advance for a magazine subscription to Living Daily. Living Daily has yet to provide the magazine to the client. What accounts would Living Daily use to recognize this advance
Following is the unadjusted trial balance for Pens Unlimited on December 31, 2017.You are also given the following supplemental information: A pending lawsuit, claiming $4,200 in damages, is
What amount is payable to a state tax board if the original sales price is $3,000, and the tax rate is 3.5%?
Homeland Plus specializes in home goods and accessories. In order for the company to expand its business, the company takes out a long-term loan in the amount of $650,000. Assume that any loans are
Shoe Hut sells custom, handmade shoes. It offers a one-year warranty on all shoes for repair or replacement. Review each of the transactions and prepare any necessary journal entries for each
McMasters Inc. specializes in BBQ accessories. In order for the company to expand its business, they take out a long-term loan in the amount of $800,000. Assume that any loans are created on January
Following is the unadjusted trial balance for Sun Energy Co. on December 31, 2017.You are also given the following supplemental information: A pending lawsuit, claiming $2,700 in damages, is
Emperor Pool Services provides pool cleaning and maintenance services to residential clients. It offers a one-year warranty on all services. Review each of the transactions, and prepare any necessary
Lime Co. incurs a $4,000 note with equal principal installment payments due for the next eight years. What is the amount of the current portion of the noncurrent note payable due in the second
What specific accounts are recognized when a business purchases equipment on credit?
Bhakti Games is a chain of board game stores. Record entries for the following transactions related to Bhakti’s purchase of inventory.A. On October 5, Bhakti purchases and receives inventory from
Air Compressors Inc. purchases compressor parts for its inventory from a supplier. The following transactions take place during the current year:A. On April 5, the company purchases 400 parts for
Serene Company purchases fountains for its inventory from Kirkland Inc. The following transactions take place during the current year.A. On July 3, the company purchases thirty fountains for $1,200
Which of the following best describes a contingent liability that is likely to occur but cannot be reasonably estimated?A. Reasonably possibleB. Probable and estimableC. Probable and inestimableD.
Lemur Corp. is going to pay three employees a year-end bonus. The amount of the year-end bonus and the amount of federal income tax withholding are as follows.Lemur’s payroll deductions include
Pickles R Us is a pickle farm located in the Northeast. The following transactions take place:A. On November 6, Pickles borrows $820,000 from a bank to cover the initial cost of expansion. Terms of
Airplanes Unlimited purchases airplane parts from a supplier on March 19 at a quantity of 4,800 parts at $12.50 per part. Terms of the purchase are 3/10, n/30. Airplanes pays one-third of the amount
Mohammed LLC is a growing consulting firm. The following transactions take place during the current year.A. On June 10, Mohammed borrows $270,000 from a bank to cover the initial cost of expansion.
Blake Department Store sells television sets with one-year warranties that cover repair and replacement of television parts. In the month of June, Blake sells forty television sets with a per unit
Record the journal entries for each of the following payroll transactions. Apr. 2 Apr. 4 Apr. 11 Apr. 14 Apr. 22 Paid $650 and $340 cash to a federal depository for FICA Social Security and FICA
What accounts are used to record a contingent warranty liability that is probable and estimable but has yet to be fulfilled?A. Warranty liability and cashB. Warranty expense and cashC. Warranty
If a bankruptcy is deemed likely to occur and is reasonably estimated, what would be the recognition and disclosure requirements for the company?
Use information from EA10. Compute the interest expense due when Barkers honors the note. Show the journal entry to recognize payment of the short-term note on December 4.Data from in EA10Barkers
Reference Figure 12.15 and use the following information to complete the requirements.A. Determine the federal income tax withholdings amount per monthly pay period for each employee.B. Record the
Whole Leaves wants to upgrade their equipment, and on January 24 the company takes out a loan from the bank in the amount of $310,000. The terms of the loan are 6.5% annual interest rate, payable in
Which of the following best describes a contingent liability that is unlikely to occur?A. RemoteB. Probable and estimableC. Reasonably possibleD. Probable and inestimable
Name the four contingent liability treatments.
Scrimiger Paints wants to upgrade its machinery and on September 20 takes out a loan from the bank in the amount of $500,000. The terms of the loan are 2.9% annual interest rate and payable in 8
Following are payroll deductions for Mars Co. Classify each payroll deduction as either a voluntary or involuntary deduction. Record a (V) for voluntary and an (I) for involuntary. Payroll
Which of the following accounts are used when a short term note payable with 5% interest is honored (paid)?A. Short-term notes payable, cashB. Short-term notes payable, cash, interest expenseC.
A company’s sales for January are $250,000. If the company projects warranty obligations to be 5% of sales, what is the warranty liability amount for January?
Marc & Associates employs Janet Evanovich at its law firm. Her gross income for June is $7,500. Payroll for the month of June follows: federal income tax of $650, state income tax of $60, local
Which of the following is not a characteristic of a short-term note payable?A. Payment is due in less than a year.B. It bears interest.C. It can result from an accounts payable conversion.D. It is
What is a key difference between a short-term note payable and a current portion of a noncurrent note payable?
Toren Inc. employs one person to run its solar management company. The employee’s gross income for the month of May is $6,000. Payroll for the month of May is as follows: FICA Social Security tax
In EB13, you prepared the journal entries for Janet Evanovich, an employee of Marc & Associates. You have now been given the following additional information: June is the first pay period for
Sunlight Growers borrows $250,000 from a bank at a 4% annual interest rate. The loan is due in three months. At the end of the three months, the company pays the amount due in full. How much did the
What business circumstance could bring about a short-term note payable created from a purchase?
In EA14, you prepared the journal entries for the employee of Toren Inc. You have now been given the following additional information:• May is the first pay period for this employee. FUTA taxes are
An employee and employer cost-share 401(k) plan contributions, health insurance premium payments, and charitable donations. The employer also provides annual vacation compensation equal to ten days
Marathon Peanuts converts a $130,000 account payable into a short-term note payable, with an annual interest rate of 6%, and payable in four months. How much interest will Marathon Peanuts owe at the
What business circumstance could produce a short-term notes payable created from a loan?
An employee and employer cost-share pension plan contributions and health insurance premium payments. If the employee covers 35% of the pension plan contribution and 25% of the health insurance
An employee earns $8,000 in the first pay period. The FICA Social Security Tax rate is 6.2%, and the FICA Medicare tax rate is 1.45%. What is the employee’s FICA taxes responsibility?A. $535.50B.
Jain Enterprises honors a short-term note payable. Principal on the note is $425,000, with an annual interest rate of 3.5%, due in 6 months. What journal entry is created when Jain honors the note?
Which of the following is considered an employer payroll tax?A. FICA MedicareB. FUTAC. SUTAD. A and B onlyE. B and C onlyF. A, B, and C
Use Figure 12.15 as a reference to answer the following questions.A. If an employee makes $1,400 per month and files as single with no withholding allowances, what would be his monthly income tax
What are examples of involuntary deductions employers are required to collect for employee and employer payroll liabilities?
Employees at Rayon Enterprises earn one day a month of vacation compensation (twelve days total each year). Vacation compensation is paid at an hourly rate of $45, based on an eight-hour work day.
What are the tax rates for FICA Social Security and FICA Medicare? What are the maximum taxable earnings amounts for each of these taxes?
An employee and employer cost-share health insurance. If the employee covers three-fourths of the cost and the employer covers the rest, what would be the employee’s responsibility if the total
What are FUTA and SUTA taxes? Is there any possible reduction in the FUTA tax rate? If so, what is the reduction, and how is this determined?
Sub-Cinema Inc. borrowed $10,000 on Jan. 1 and will repay the loan with 12 equal payments made at the end of the month for 12 months. The interest rate is 12% annually. If the monthly payments are
Below is select information from two, independent companies.Additional information includes:• On January 1, Company A issued a 5-year $1,500,000 bond with at 6% stated rate. Interest is paid
It is somewhat difficult to find current quotes on corporate bonds, but one source is the Financial Industry Regulatory Authority. Using the link http://finra
An amortization table ________.A. Breaks each payment into the amount that goes toward interest and the amount that goes toward the principalB. Is a special table used in a break room to make people
What is the difference between callable and putable bonds?
Halep Inc. borrowed $30,000 from Davis Bank and signed a 4-year note payable stating the interest rate was 4% compounded annually. Halep Inc. will make payments of $8,264.70 at the end of each year.
Sharapovich Inc. borrowed $50,000 from Kerber Bank and signed a 5-year note payable stating the interest rate was 5% compounded annually. Sharapovich Inc. will make payments of $11,548.74 at the end
Charleston Inc. issued $200,000 bonds with a stated rate of 10%. The bonds had a 10-year maturity date. Interest is to be paid semi-annually and the market rate of interest is 8%. If the bonds sold
A debenture is ________.A. The interest paid on a bondB. A type of bond that can be sold back to the issuing company whenever the bondholder wishesC. A bond with only the company’s word that they
Beluga Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 3% when the market rate was 4%. Interest was paid annually. The bonds were sold at 87.5. What was the sales price
Waylan Sisters Inc. issued 3-year bonds with a par value of $100,000 and a 6% annual coupon when the market rate of interest was 5%. If the bonds sold at 102.438, how much cash did Williams Sisters
On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%. The bonds paid interest semi-annually. Assuming the bonds sold at 58.55, what was the selling price of the
Starmount Inc. sold bonds with a $50,000 face value, 12% interest, and 10-year term at $48,000. What is the total amount of interest expense over the life of the bonds?
Assume you are a newly-hired accountant for a local manufacturing firm. You have enjoyed working for the company and are looking forward to your first experience participating in the preparation of
The principal of a bond is ________.A. The person who sold the bond for the companyB. The person who bought the bondC. The interest rate printed on the front of the bondD. The face amount of the bond
What is a junk bond?
Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the market rate was 6%. Interest was paid semi-annually. Calculate and explain the timing of the cash
Smashing Cantaloupes Inc. issued 5-year bonds with a par value of $35,000 and an 8% semiannual coupon (payable June 30 and December 31) on January 1, 2018, when the market rate of interest was 10%.
Eli Inc. issued $100,000 of 8% annual, 5-year bonds for $103,000. What is the total amount of interest expense over the life of the bonds?
Irving Inc. sold bonds with a $50,000, 10% interest, and 10-year term at $52,000. What is the total amount of interest expense over the life of the bonds?
A convertible bond can be converted into ________.A. Preferred stockB. Common stock and then converted into preferred stockC. Common stock of a different companyD. Common stock of the company
How are savings bonds different from a corporate bond?
On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%.
Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market rate of 4%. The bonds paid interest semi-annually on June 30 and Dec. 31. How much money did the
Evie Inc. issued 50 bonds with a $1,000 face value, a five-year life, and a stated annual coupon of 6% for $980 each. What is the total amount of interest expense over the life of the bonds?
Dixon Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $480,000. Interest is payable annually. The discount is amortized using the
On January 1, a company issued a 5-year $100,000 bond at 6%. Interest payments on the bond of $6,000 are to be made annually. If the company received proceeds of $112,300, how would the bond’s
What do you have to do to the interest rate and years of maturity if a bond pricing problem tells you that interest is compounded quarterly?
Diana Inc. issued $100,000 of its 9%, 5-year bonds for $96,149 when the market rate was 10%. The bonds pay interest semi-annually. Prepare an amortization table for the first three payments.
Haiku Inc. issued $600,000 of 10-year bonds with a stated rate of 11% when the market rate was 12%. The bonds pay interest semi-annually. Prepare the first three years of an amortization schedule.
Volunteer Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $540,000. Interest is payable annually. The premium is amortized using the
Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018, and received $540,000. Interest is payable semi-annually. The premium is amortized using the
Edward Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $480,000. Interest is payable semiannually. The discount is amortized using the
On July 1, a company sells 8-year $250,000 bonds with a stated interest rate of 6%. If interest payments are paid annually, each interest payment will be ________.A. $120,000B. $60,000C. $7,500D.
An amortization table/schedule is created to compute the amount to be amortized each year. What are the four columns needed to prepare the table?
Oak Branch Inc. issued $700,000 of 5%, 10-year bonds when the market rate was 4%. They received $757,243. Interest was paid semi-annually. Prepare an amortization table for the first three years of
Waldron Inc. issued $400,000 bonds with a stated rate of 7% when the market rate was 5%. They are 3-year bonds with interest to be paid annually. Prepare a table to amortize the premium of the bonds.
On January 1 a company issues a $75,000 bond that pays interest semi-annually. The first interest payment of $1,875 is paid on July 1. What is the stated annual interest rate on the bond?A. 5.00%B.
In the amortization table, how is the amortization of discount of premium computed?
On Jan. 1, Year 1, Foxcroft Inc. issued 100 bonds with a face value of $1,000 for $104,000. The bonds had a stated rate of 6% and paid interest semiannually. What is the journal entry to record the
Willoughby Inc. issued 100 bonds with a face value of $1,000 and a stated rate of 4% and received $105,000. What is the journal entry to record the sale of the bonds?
On October 1 a company sells a 3-year, $2,500,000 bond with an 8% stated interest rate. Interest is paid quarterly and the bond is sold at 89.35. On October 1 the company would collect ________.A.
Does issuing a bond at a discount increase or decrease interest expense over the life of the bond?

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