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Accounting final 4-25 p2

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1. An employee earned $3,600 working for an employer. The current rate for FICA Social Security is 6.2% and the rate for FICA Medicare 1.45%. The employer's total FICA payroll tax for this employee is
$52.20.
$223.20.
$275.40.
$550.80.


Zero, since the FICA tax is a deduction from an employee's pay, and not an employer tax.
2. A company factored $48,000 of its accounts receivable and was charged a 3% factoring fee. The journal entry to record this transaction would include a:

3. A company used the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts:

All sales are made on credit. Based on past experience, the company estimates 3.0% its outstanding receivables are uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

4. A company uses the percent of sales method to determine its bad debts expense. At the end
of the current year, the company's unadjusted trial balance reported the following selected amounts:

Accounts receivable $360,000 Debit
Allowance for doubtful accounts 550 Credit
Net sales 805,000 Credit

All sales are made on credit. Based on past experience, the company estimates 0.5% of credit sales to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

5. Martha Company has an established petty cash fund in the amount of $500. The fund was last reimbursed on November 3 At the end of December, the fund contained the following petty cash receipts:

December 4 Freight charge for merchandise purchased $ 50
December 7 Freight charge for delivery to customer $ 74
December 12 Purchase of office supplies $ 39
December 18 Donation to charitable organization $ 58

If, in addition to these receipts, the petty cash fund contains $267.00 of cash, the journal entry to reimburse the fund on December 31 will include:

6. A company uses the percent of receivables method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts:

Accounts receivable $ 432,000 Debit
Allowance for Doubtful Accounts 1,380 Debit
Net Sales 2,230,000 Credit

All sales are made on credit. Based on past experience, the company estimates 3.0% of its outstanding receivables are uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

7. Arena Company provides health insurance to its employees that costs $16,000 per month. In addition, the company contributes 4% of the employees' $160,000 gross salary to a retirement program. The entry to record the accrued benefits for the month would include a:

8. A company had fixed interest expense of $4,200, its income before interest expense and any income taxes is $16,800, and its net income is $7,200. The company's times interest earned ratio equals:

8. During August, Arena Company sells $361,000 in product that has a one year warranty. Experience shows that warranty expenses average about 5% of the selling price. The warranty liability account has a balance of $12,300 before adjustment. Customers returned product for warranty repairs during the month that used $8,900 in parts for repairs.
The entry to record the estimated warranty expense for the month is:

9. An asset's book value is $18,800 on June 30, Year 6. The asset is being depreciated at an annual rate of $3,800 on the straight-line method. Assuming the asset is sold on December 31, Year 7 for $15,800, the company should record:

10. A company purchased property for $100,000. The property included a building, a parking lot, and land. The building was appraised at $59,500; the land at $47,000, and the parking lot at $18,500. Land should be recorded in the accounting records with an allocated cost of (Do not round intermediate calculations):
$100,000.
$43,600.
$5.
$47,000.
$37,600.

11. An employee earned $45,400 during the year working for an employer. 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:
$658.30.
$3,473.10.
$2,814.80.
Zero, since the employee's pay exceeds the FICA limit.
$6,946.20.

12. Monte Ray leases office space for $6,300 per month. On January 3, Monte Ray incurs $94,400 to improve his leased office space. These improvements are expected to yield benefits for 10 years. Ray has 8 years remaining on his lease. Compute the amount of expense that should be recorded the first year related to the improvements.
$6,300.
$15,740.
$18,100.
$11,800.

13. A company had average total assets of $922,000. Its gross sales were $1,093,000 and its net sales were $975,000. The company's total asset turnover equals (Round your final answer to two decimal places):

a).84
b).95
c) 1.12
d) 1.21
e) 1.06

14. On November 1, Carter Company signed a 120-day, 12% note payable, with a face value of $18,900. What is the adjusting entry for the accrued interest at December 31 on the note? (Use 360 days a year.)

15. Regina Harrison is a partner in Pressed for Time. An analysis of Regina Harrison's capital account indicates that during the most recent year, she withdrew $31,000 from the partnership.

Her share of the partnership's net loss was $21,500 and she made an additional equity contribution of $21,000. Her capital account ended the year at $161,000. What was her capital balance at the beginning of the year?

a. 160,500
b. 139,500
c. 192,500
d. 214,000
e. 129,500

16. A company has 31,000 shares of common stock outstanding. The stockholders' equity applicable to common shares is $393,700, and the par value per common share is $10. The book value per share is:
$2.70.

$12.70.
$39.37.
$10.00.
$0.08.

17. A company has earnings per share of $9.90. Its dividend per share is $.65, its market price per share is $126.72, and its book value per share is $103. Its price-earnings ratio equals:
10.40.
8.80.
9.90.
12.80.
15.23.

18. A corporation had 10,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 3,000 shares. At the time of the stock dividend, the market value per share was $12. The entry to record this dividend is:

19. Web Services is organized as a limited partnership, with David White as one of its partners. David's capital account began the year with a balance of $46,600. During the year, David's share of the partnership income was $9,100, and David received $5,600 in distributions from the partnership. What is David's partner return on equity?
12.0%
19.5%
18.8%
11.6%
18.2%

20. Shamrock Company had net income of $33,120. The weighted-average common shares outstanding were 9,600. The company declared a $4,300 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company's earnings per share is:
$3.00.
$2.75.
$3.65.
$3.45.
$3.90.

21. A company has net income of $920,000; its weighted-average common shares outstanding are 184,000. Its dividend per share is $.65, its market price per share is $92, and its book value per share is $82.0. Its price-earnings ratio equals (Do not round your intermediate calculations):
18.40. (92/(920000/184000)
10.65.
16.40.
10.00.
9.35.

22. Trump and Hawthorne have decided to form a partnership. Trump is going to contribute a depreciable asset to the partnership as his equity contribution to the partnership. The following information regarding the asset to be contributed by Trump is available:

Historical cost of the asset $78,000
Accumulated depreciation on the asset $41,000
Note payable secured by the asset* $20,000
Agreed-upon market value of the asset $46,000

Based on this information, Trump's beginning equity balance in the partnership will be:

$46,000
$20,000
$26,000
$37,000
$78,000

23. A company has 1,500 shares of $100 par preferred stock. It also has 30,000 shares of common stock outstanding, and its total stockholders' equity equals $645,000. The book value per common share is:

$15.71
$100.00
$20.48
$16.50

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