Connect - another Financial Accounting, Chapter 9

1.

Dextra Computing sells merchandise for $18,000 cash on September 30 (cost of merchandise is $10,800). The sales tax law requires Dextra to collect 2% sales tax on every dollar of merchandise sold. Record the entry for the $18,000 sale and its applicable sales tax. Also record the entry that shows the payment of the 2% tax on this sale to the state government on October 15.

No	Date	General Journal	Debit	Credit
1	Sep 30	Cashselected answer correct	18,360selected answer correct	not attempted
		Salesselected answer correct	not attempted	18,000selected answer correct
		Sales taxes payableselected answer correct	not attempted	360selected answer correct
2	Sep 30	Cost of goods soldselected answer correct	10,800selected answer correct	not attempted
		Merchandise inventoryselected answer correct	not attempted	10,800selected answer correct
3	Oct 15	Sales taxes payableselected answer correct	360selected answer correct	not attempted
		Cashselected answer correct	not attempted	360selected answer correct

----------------------------------------------------------------------------------- 2. Ticketsales, Inc., receives $4,920,000 cash in advance ticket sales for a four-date tour of Bon Jovi. Record the advance ticket sales on October 31. Record the revenue earned for the first concert date of November 5, assuming it represents one-fourth of the advance ticket sales. Ticketsales, Inc. initially records prepaid and unearned items in balance sheet accounts. No Date General Journal Debit Credit 1 Oct 31 Cashselected answer correct 4,920,000selected answer correct not attempted Unearned ticket revenueselected answer correct not attempted 4,920,000selected answer correct 2 Nov 05 Unearned ticket revenueselected answer correct 1,230,000selected answer correct not attempted Earned ticket revenueselected answer correct not attempted 1,230,000selected answer correct ----------------------------------------------------------------------------------- 3. On November 7, 2017, Mura Company borrows $190,000 cash by signing a 90-day, 12% note payable with a face value of $190,000. (Use 360 days a year. Do not round your intermediate calculations.) 1. Compute the accrued interest payable on December 31, 2017. Principal x Rate (%) x Time     = Interest Total through maturity $190,000selected answer correct 12selected answer correct % 90/360selected answer correct $5,700selected answer correct Year end interest accrual $190,000selected answer correct 12selected answer correct % 54/360selected answer correct $3,420selected answer correct Interest recognized February 5 $190,000selected answer correct 12selected answer correct % 36/360selected answer correct $2,280selected answer correct 2. & 3. Prepare the journal entry to record the accrued interest expense at December 31, 2017 and payment of the note at maturity. No Date General Journal Debit Credit 1 Dec 31, 2017 Interest expenseselected answer correct 3,420selected answer correct not attempted Interest payableselected answer correct not attempted 3,420selected answer correct 2 Feb 05, 2018 Notes payableselected answer correct 190,000selected answer correct not attempted Interest payableselected answer correct 3,420selected answer correct not attempted Interest expenseselected answer correct 2,280selected answer correct not attempted Cashselected answer correct not attempted 195,700selected answer correct ----------------------------------------------------------------------------------- 4. Merger Co. has 10 employees, each of whom earns $1,850 per month and has been employed since January 1. FICA Social Security taxes are 6.2% of the first $118,500 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.6% 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. (Round your answers to 2 decimal places.) No Date General Journal Debit Credit 1 Mar 31 Payroll taxes expenseselected answer correct 2,525.25selected answer correct not attempted FICA—Social sec. taxes payableselected answer correct not attempted 1,147.00selected answer correct FICA—Medicare taxes payableselected answer correct not attempted 268.25selected answer correct Federal unemployment taxes payableselected answer correct not attempted 111.00selected answer correct State unemployment taxes payableselected answer correct not attempted 999.00selected answer correct ----------------------------------------------------------------------------------- 5. Noura Company offers an annual bonus to employees if the company meets certain net income goals. Prepare the journal entry to record a $16,000 bonus owed to its workers (to be shared equally) at calendar year-end. No Date General Journal Debit Credit 1 Dec 31 Employee bonus expenseselected answer correct 16,000selected answer correct not attempted Bonus payableselected answer correct not attempted 16,000selected answer correct ----------------------------------------------------------------------------------- 6. On September 11, 2016, Home Store sells a mower for $420 with a one-year warranty that covers parts. Warranty expense is estimated at 6% of sales. On July 24, 2017, the mower is brought in for repairs covered under the warranty requiring $29 in materials taken from the Repair Parts Inventory.   Prepare the September 11, 2016, entry to record the mower sale, and the July 24, 2017, entry to record the warranty repairs. (Round your answers to 2 decimal places.) No Date General Journal Debit Credit 1 Sep 11, 2016 Cashselected answer correct 420.00selected answer correct not attempted Salesselected answer correct not attempted 420.00selected answer correct 2 Sep 11, 2016 Warranty expenseselected answer correct 25.20selected answer correct not attempted Estimated warranty liabilityselected answer correct not attempted 25.20selected answer correct 3 Jul 24, 2017 Estimated warranty liabilityselected answer correct 29.00selected answer correct not attempted Repair parts inventoryselected answer correct not attempted 29.00selected answer correct ----------------------------------------------------------------------------------- 7. The payroll records of Speedy Software show the following information about Marsha Gottschalk, an employee, for the weekly pay period ending September 30, 2017. Gottschalk is single and claims one allowance. Compute her Social Security tax (6.2%), Medicare tax (1.45%), federal income tax withholding, state income tax (1.0%), and net pay for the current pay period. (Use the withholding table in Exhibit 11A.6) (Round your final answers to 2 decimal places.)       Total (gross) earnings for current pay period $ 670 Cumulative earnings of previous pay periods $ 8,710 Gross pay 670.00selected answer correct Social security tax deduction $41.54selected answer correct Medicare tax deduction 9.72selected answer correct Federal income tax deduction 78.00selected answer correct State income tax deduction 6.70selected answer correct Total deductions 135.95 Net pay $534.05 ----------------------------------------------------------------------------------- 8. Keesha Co. borrows $170,000 cash on November 1, 2017, by signing a 90-day, 12% note with a face value of $170,000.   1. On what date does this note mature? (Assume that February has 28 days) January 30, 2018.  2. & 3. What is the amount of interest expense in 2017 and 2018 from this note? (Use 360 days a year. Round final answers to the nearest whole dollar.) 4. Prepare journal entries to record (a) issuance of the note, (b) accrual of interest at the end of 2017, and (c) payment of the note at maturity. (Assume no reversing entries are made.) (Use 360 days a year. Do not round intermediate calculations.) No Transaction General Journal Debit Credit 1 (a) Cashselected answer correct 170,000selected answer correct not attempted Notes payableselected answer correct not attempted 170,000selected answer correct 2 (b) Interest expenseselected answer correct 3,400selected answer correct not attempted Interest payableselected answer correct not attempted 3,400selected answer correct 3 (c) Interest expenseselected answer correct 1,700selected answer correct not attempted Interest payableselected answer correct 3,400selected answer correct not attempted Notes payableselected answer correct 170,000selected answer correct not attempted Cashselected answer correct not attempted 175,100selected answer correct ----------------------------------------------------------------------------------- 9. Lenny Florita, an unmarried employee, works 52 hours in the week ended January 12. His pay rate is $12 per hour, and his wages are subject to no deductions other than FICA Social Security, FICA Medicare, and federal income taxes. He claims three withholding allowances. Compute his regular pay, overtime pay (for this company, workers earn 150% of their regular rate for hours in excess of 40 per week), and gross pay. Then compute his FICA tax deduction (use 6.2% for the Social Security portion and 1.45% for the Medicare portion), income tax deduction (use the wage bracket withholding table from Exhibit 11A.6.), total deductions, and net pay. (Round your intermediate calculations and final answers to 2 decimal places.) Hours Hourly Rate Regular pay 40selected answer correct $12.00selected answer correct $480.00 Overtime pay 12selected answer correct $18.00selected answer correct 216.00 Gross pay 696.00 FICA - Social Security tax deduction $43.15selected answer correct FICA - Medicare tax deduction 10.09selected answer correct Income tax deduction 62.00selected answer correct Total deductions 115.24 Net pay $580.76selected answer correct