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Tuesday, July 9, 2019

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.
NoDateGeneral JournalDebitCredit
1Sep 3018,360selected answer correctnot attempted
not attempted18,000selected answer correct
not attempted360selected answer correct
2Sep 3010,800selected answer correctnot attempted
not attempted10,800selected answer correct
3Oct 15360selected answer correctnot attempted
not attempted360selected answer correct

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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.
NoDateGeneral JournalDebitCredit
1Oct 314,920,000selected answer correctnot attempted
not attempted4,920,000selected answer correct
2Nov 051,230,000selected answer correctnot attempted
not attempted1,230,000selected answer correct

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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.
Principalx Rate (%)x Time    = Interest
Total through maturity190,000selected answer correct12selected answer correct%5,700selected answer correct
Year end interest accrual190,000selected answer correct12selected answer correct%3,420selected answer correct
Interest recognized February 5190,000selected answer correct12selected 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.
NoDateGeneral JournalDebitCredit
1Dec 31, 20173,420selected answer correctnot attempted
not attempted3,420selected answer correct
2Feb 05, 2018190,000selected answer correctnot attempted
3,420selected answer correctnot attempted
2,280selected answer correctnot attempted
not attempted195,700selected answer correct

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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.)
NoDateGeneral JournalDebitCredit
1Mar 312,525.25selected answer correctnot attempted
not attempted1,147.00selected answer correct
not attempted268.25selected answer correct
not attempted111.00selected answer correct
not attempted999.00selected answer correct

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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.
NoDateGeneral JournalDebitCredit
1Dec 3116,000selected answer correctnot attempted
not attempted16,000selected answer correct

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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.)
NoDateGeneral JournalDebitCredit
1Sep 11, 2016420.00selected answer correctnot attempted
not attempted420.00selected answer correct
2Sep 11, 201625.20selected answer correctnot attempted
not attempted25.20selected answer correct
3Jul 24, 201729.00selected answer correctnot attempted
not attempted29.00selected answer correct

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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 pay670.00selected answer correct
Social security tax deduction41.54selected answer correct
Medicare tax deduction9.72selected answer correct
Federal income tax deduction78.00selected answer correct
State income tax deduction6.70selected answer correct
Total deductions135.95
Net pay$534.05

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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)
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.)
NoTransactionGeneral JournalDebitCredit
1(a)170,000selected answer correctnot attempted
not attempted170,000selected answer correct
2(b)3,400selected answer correctnot attempted
not attempted3,400selected answer correct
3(c)1,700selected answer correctnot attempted
3,400selected answer correctnot attempted
170,000selected answer correctnot attempted
not attempted175,100selected answer correct

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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.)
HoursHourly Rate
Regular pay40selected answer correct12.00selected answer correct$480.00
Overtime pay12selected answer correct18.00selected answer correct216.00
Gross pay696.00
FICA - Social Security tax deduction43.15selected answer correct
FICA - Medicare tax deduction10.09selected answer correct
Income tax deduction62.00selected answer correct
Total deductions115.24
Net pay580.76selected answer correct