# ACCOUNTING

ACCOUNTING

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31.

Harvel Company is required by law to collect and remit sales taxes to the state. If Havel has \$4,500 of cash sales that are subject to an 6% sales tax, what is the journal entry to record the cash sales?

Debit Cash \$4,500; credit Sales \$4,230; credit Sales Taxes Payable \$270.

Debit Accounts Receivable \$4,770; credit Sales \$4,500; credit Sales Taxes Payable \$270.

Debit Sales Taxes Payable \$270; debit Cash \$4,230; credit Sales \$4,500.

Debit Cash \$4,770; credit Sales \$4,500; credit Sales Taxes Payable \$270.

Debit Cash \$4,500; credit Sales \$4,500; and record the sales tax when paid.

32. On November 1, Carter Company signed a 120-day, 12% note payable, with a face value of \$10,800. What is the adjusting entry for the accrued interest at December 31 on the note? (Use 360 days a year.)

No journal entry required.

Debit interest expense, \$144; credit interest payable, \$144.

Debit interest expense, \$216; credit interest payable, \$216.

Debit interest expense, \$288; credit interest payable, \$288.

Debit interest expense, \$432; credit interest payable, \$432.

33. A company purchased a cash register on January 1 for \$5,900. This register has a useful life of 5 years and a salvage value of \$650. What would be the depreciation expense for the second year of its useful life using the double-declining-balance method?

\$1,416.

\$1,352.

\$2,100.

\$1,050.

\$2,360.

34. A company had average total assets of \$950,000. Its gross sales were \$1,106,000 and its net sales were \$945,000. The company’s total asset turnover equals (Round your final answer to two decimal places):

0.99.

1.14.

1.01.

1.17.

0.86.

34.

A company purchased property for \$100,000. The property included a building, a parking lot, and land. The building was appraised at \$57,500; the land at \$48,600, and the parking lot at \$18,900. Land should be recorded in the accounting records with an allocated cost of (Do not round intermediate calculations):

\$44,880.

\$9.

\$100,000.

\$48,600.

\$38,880.

35. A company purchased property for \$100,000. The property included a building, a parking lot, and land. The building was appraised at \$57,500; the land at \$48,600, and the parking lot at \$18,900. Land should be recorded in the accounting records with an allocated cost of (Do not round intermediate calculations):

\$44,880.

\$100,000.

\$38,880.

\$9.

\$48,600.

36.

Phil Phoenix is paid on a monthly basis. For the month of January of the current year, he earned a total of \$9,038. FICA tax for Social Security is 6.2% and the FICA tax for Medicare is 1.45%. The FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first \$7,000 of an employee’s pay. The amount of Federal Income Tax withheld from his earnings was \$1,499.67. What is the amount of the employer’s monthly payroll tax expenses for this employee? (Round your intermediate calculations and final answer to two decimal places.)

\$131.05

\$560.36

\$378.00

\$56.00

\$1,125.41

37.

Employees earn vacation pay at the rate of one day per month. During July, 23 employees qualify for one vacation day each. Their average daily wage is \$98 per day. What is the amount of vacation benefit expense to be recorded for the month of July?

\$2,254

\$98

\$23

\$225.40

\$22,540

38. On December 1, Martin Company signed a 90-day, 6% note payable, with a face value of \$12,000. What amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)

\$120

\$60

\$180

\$0

\$720

39.

A company purchased a delivery van for \$14,000 with a salvage value of \$2,000 on September 1, Year 1. It has an estimated useful life of 4 years. Using the straight-line method, how much depreciation expense should the company recognize on December 31, Year 1? (Do not round intermediate calculations. Round your final answer to whole dollar amount.)

\$750.

\$3,500.

\$1,000.

\$1,167.

\$3,000.

40.

An employee earned \$46,800 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:

\$3,580.20.

Zero, since the employee’s pay exceeds the FICA limit.

\$678.60.

\$7,160.40.

\$2,901.60.

41. A corporation was formed on January 1. The corporate charter authorized 100,000 shares of \$10 par value common stock. During the first month of operation, the corporation issued 220 shares to its attorneys in payment of a \$4,200 charge for drawing up the articles of incorporation. The entry to record this transaction would include:

A debit to Organization Expenses for \$2,200.

A credit to Common Stock for \$4,200.

A credit to Paid-in Capital in Excess of Par Value, Common Stock for \$4,200.

A debit to Organization Expenses for \$4,200.

A debit to Paid-in Capital in Excess of Par Value, Common Stock for \$2,000.

42. A company has 30,000 shares of common stock outstanding. The stockholders’ equity applicable to common shares is \$382,500, and the par value per common share is \$10. The book value per share is:

\$10.00.

\$38.25.

\$0.08.

\$12.75.

\$2.75.

43. The partnership agreement for Smith Wesson & Davis, a general partnership, provided that profits be shared between the partners in the ratio of their financial contributions to the partnership. Smith contributed \$150,000, Wesson contributed \$90,000 and Davis contributed \$30,000. In the partnership’s first year of operation, it incurred a loss of \$256,500. What amount of the partnership’s loss, should be absorbed by Smith? (Do not round your intermediate calculations and round your final answer to the nearest whole dollar amount.)

\$128,250

\$28,500

\$64,125

\$85,500

\$142,500

44.

Badger and Fox are forming a partnership. Badger contributes a building that has a market value of \$366,000; the partnership assumes responsibility for a \$133,000 note secured by a mortgage on the property. Fox invests \$108,000 in cash and equipment that has a market value of \$83,000. For the partnership, the amounts recorded for total assets and for total capital account are:

Total assets \$557,000; total capital \$557,000.

Total assets \$557,000; total capital \$424,000.

Total assets \$424,000; total capital \$557,000.

Total assets \$424,000; total capital \$424,000.

Total assets \$690,000; total capital \$690,000

45.Smith, West, and Krug form a partnership. Smith contributes \$201,000, West contributes \$167,500, and Krug contributes \$301,500. Their partnership agreement calls for a 6% interest allowance on the partner’s capital balances with the remaining income or loss to be allocated equally. If the partnership reports income of \$205,200 for its first year, what amount of income is credited to West’s capital account?

\$67,060.

\$68,400.

\$55,000.

\$65,050.

\$73,090.

46. Rice, Hepburn, and DiMarco formed a partnership with Rice contributing \$63,600, Hepburn contributing \$53,000 and DiMarco contributing \$42,400. Their partnership agreement called for the income (loss) division to be based on the ratio of capital investments. If the partnership had income of \$84,000 for its first year of operation, what amount of income would be credited to DiMarco’s capital account? (Do not round your intermediate calculations. Round your final answer to the nearest thousand.)

\$84,000.

\$33,600.

\$22,400.

\$28,000.

\$42,400.

47. A company had a beginning balance in retained earnings of \$43,400. It had net income of \$6,400 and paid out cash dividends of \$5,725 in the current period. The ending balance in retained earnings equals:

\$12,125.

\$42,725.

\$44,075.

\$49,800.

\$55,525.

48. Smith, West, and Krug form a partnership. Smith contributes \$177,000, West contributes \$147,500, and Krug contributes \$265,500. Their partnership agreement calls for a 6% interest allowance on the partner’s capital balances with the remaining income or loss to be allocated equally. If the partnership reports income of \$176,400 for its first year, what amount of income is credited to Krug’s capital account?

\$55,850.

\$57,620.

\$47,000.

\$62,930.

\$58,800.

49. A company has earnings per share of \$9.20. Its dividend per share is \$1.25, its market price per share is \$111.32, and its book value per share is \$87. Its price-earnings ratio equals:

12.10.

7.36.

8.10.

9.20.

9.46.

50. A corporation had 13,000 shares of \$10 par value common stock outstanding when the board of directors declared a stock dividend of 4,680 shares. At the time of the stock dividend, the market value per share was \$18. The entry to record this dividend is:

No entry is needed.

Debit Common Stock Dividend Distributable \$84,240; credit Retained Earnings \$84,240.

Debit Retained Earnings \$46,800; credit Common Stock Dividend Distributable \$46,800.

Debit Retained Earnings \$84,240; credit Common Stock Dividend Distributable \$84,240.

Debit Retained Earnings \$84,240; credit Common Stock Dividend Distributable \$46,800; credit Paid-In Capital in Excess of Par Value, Common Stock \$37,440.

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