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    Homework   1.1  1.2   2.1  2.2  3.1  3.2   4.1  4.2  5.1  5.2   6.1   6.2  7.1  7.2  8.1  8.2  9.1  9.2  10.1   10.2  11.1   11.2  12.1  12.2   13.1  13.2

On September 11, 2012, Home Store sells a mower for $500 with a one-year warranty
that covers parts. Warranty expense is estimated at 8% of sales. On July 24, 20 13, the
mower is brought in for repairs covered under the warranty requiring $35 in materials taken
from the Repair Parts Inventory.
Prepare the September 11 , 20 12, entry to record the mower sale, and the July 24, 20 13,
entry to record the warranty repairs.
(Assume all sales are cash sales and Home-store uses a periodic inventory system and
estimated warranty expense is recorded at the time of the sale.}
 

   
BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $ 11 0, 100 paid to its employee,
and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.8% and SUTA taxes are 2.9%
of the first $7,000 paid to its employee.
 

 

   
Ticket sales, Inc., receives $5,000,000 cash in advance ticket sales for a four-date tour of Bon Jovi.
Record the advance ticket sales on October 3 1. Record the revenue earned for the first concert date of November 5,
assuming it represents one-fourth of the advance ticket sales.
(Assume the company has the policy of recording cash received in advance in the balance sheet account.)
 

   
Keesha Co. borrows $200,000 cash on November 1, 20 13, by signing a 90-day, 9% note with a face value of $200,000.
On what date does this note mature?
 

What is the amount of interest expense in 20 13 and 20 14 from this note?
(Use 360 days a year. Do not round intermediate calculations.)
 

 
Prepare journal entry to record issuance of the no te on Novemb er 1, 2013.
 

Prepare journal entry to record accrual of interest at the end of 20 13.
 

 
Prepare journal entry to record payment of the note at maturity, assuming no reversing entries were made on January 1.
 

   
The following legal claims exist for Hu prey Co. Identify the accounting treatment for each claim as
either (a) a liability that is recorded or (b) an item described in notes to its financial statements
 

   
BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $ 11 0,100 paid to its employee,
and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0 .8 % and SUTA
taxes are 2.9% of the first $7,000 paid to its employee.
 

 

   
Noura Company offers an annual bonus to employees if the company meets certain net income goals.
Prepare the journal entry to record a $15,000 bonus owed to its workers (to be shared equally)
at calendar year-end
 

   
On January 15, the end of the first biweekly pay period of the year, North Company's
payroll register showed that its employees earned $35.00
of sales salaries. Withholdings from the employees' salaries include FICA Social Security
taxes at the rate of 6.2%, FICA Medicare taxes at the rate
of 1.4 5%, $6,500 of federal income taxes, $772.50 of medical insurance deductions,
and $120 of union dues.
No employee earned more than $7,000 in this first period. Prepare the journal entry to
record North Company' s January 15
(employee) payroll expenses and liabilities. (Round your answers to 2 decimal places.)
 

   
Nishi Corporation prepares financial statements for each month-end. As part of its accounting
process, estimated income taxes are accrued each month for 30% of the current month's net income.
The income taxes are paid in the first month of each quarter for the amount accrued for the prior quarter.
The following information is available for the fourth quarter of year 20 13. When tax computations are
completed on January 20, 2014, Nishi determines that the quarte r's Income Taxes Payable account
balance should be $28,300 on December 31, 20 13 (its unadjusted balance is $24,690).
 

   
On November 7, 20 13, Mura Company borrows $160,000 cash by signing a 90-day, 8% note
payable with a face value of $160,000.
(Do not round your intermediate calculations.)
 


   
Sera Corporation has made and recorded its quarterly income tax payments. After a fin al review of
taxes for the year, the company identifies an additional $40,000 of income tax expense that should be
recorded. A portion of this additional expense, $6,000, is deferred for payment in future years.
Prepare a journal entry to record Sera's year-end adjusting entry for income tax expense.
 

Compute the times interest earned for Park Company, which reports income before interest expense
and income taxes of $1,885,0 00, and interest expense of $145,000 .
 

   
The following items appear on the balance sheet of a company with a two -month operating cycle.
Identify the proper classification of each item as follows: C if it is a current liability, L if it is long-term
liability, or N if it is not a liability.
 

   
Listed below are a few transactions and events of Piper Company.
 

   
Merger Co. has ten employees, each of whom earns $2,000 per month and has been employed
since January 1.
FICA Social Security taxes are 6.2% of the first $ 110,100 paid to each employee, and FICA Medicare
taxes are 1.45% of gross pay.
FUTA taxes are 0.8% 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
 

   
Which of the following items are normally classified as a current liability for a company
that has a 15-month opera ting cycle?
 (Select all that apply.)
 

   
Dextra Computing sells merchandise for $6 ,000 cash on September 30 (cost of merchandise is $3,900).
The sales tax law requires Dextra to collect 5% sales tax on every dollar of merchandise sold.
Record the entry for the $6 ,000 sale and its applicable sales tax.
Also record the entry that shows the remittance of the 5% tax on this sale to the state government on October 15
Under the equity method, the investment account is recorded at fair value but only if fair value exceeds original cost.
 

   
Use the following information from separate companies a through f :
 

   
Chavez Co.'s salaried employees earn four weeks’ vacation per year.
It pays $312,000.00 in total employee salaries for 52 weeks but its employees work only 48 weeks.
This means Chavez's total weekly expense is $6,500 ($312,000/48 weeks) instead of the $6,000
cash paid weekly to the employees ($312,000/52 weeks).
 

   
Financial statements of investee and investor companies can only be consolidated if both
companies use the same accounting principles.
 
True
False
   
Prior to June 30, a company has never had any treasury stock transactions.
A company repurchased 100 shares of its common stock on June 30 for $40 per share. On July 20,
it reissued 50 of these shares at $46 per share.
On August 1, it reissued 20 of the shares at $38 per share. What is the balance in the Treasury Stock
account on August 2?
 
$5,050
$2,600
$100
$1,200
$0
   
West Company declared a $0.50 per share cash dividend. The company has 190,000 shares
issued, and 10,000 shares in treasury stock.
The journal entry to record the dividend declaration is:
 
Debit Retained Earnings $90,000; credit Common Dividends Payable $90,000.
Debit Common Dividends Payable $95,000; credit Cash $95,000.
Debit Retained Earnings $5,000; credit Common Dividends Payable $5,000.
Debit Common Dividends Payable $90,000; credit Cash $90,000.
Debit Retained Earnings $95,000; credit Common Dividends Payable $95,000.
   
On September 1, Ziegler Corporation had 50,000 shares of $5 par value common stock,
and $1,500,000 of retained earnings.
On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split.
The general journal entry to record this transaction is:
 
Debit Retained Earnings $750,000; credit Common Stock Split Distributable $750,000.
Debit Retained Earnings $750,000; credit Common Stock $750,000.
Debit Retained Earnings $250,000; credit Common Stock $250,000.
Debit Retained Earnings $250,000; credit Stock Split Payable $250,000.
No entry is made for this transaction.
   
Percy 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 400 shares to its attorneys in payment of a $5,000 charge for drawing up the articles
of incorporation. The entry to record this transaction would include:
 
A debit to Organization Expenses for $4,000.
A debit to Organization Expenses for $5,000.
A credit to Common Stock for $5,000.
A credit to Paid-in Capital in Excess of Par Value, Common Stock for $5,000.
A debit to Paid-in Capital in Excess of Par Value, Common Stock for $2,000.
   
A company issued 70 shares of $30 par value preferred stock for $4,000 cash.
The journal entry to record the issuance is:
 
Debit Cash $2,100; credit Preferred Stock $2,100.
Debit Investment in Preferred Stock $2,100; credit Cash $2,100.
Debit Cash $4,000; credit Preferred Stock $4,000.
Debit Preferred Stock $2,100, debit Investment in Preferred Stock $1,900; credit Cash $4,000.
Debit Cash $4,000; credit Paid-in Capital in Excess of Par Value, Preferred Stock $1,900, credit Preferred Stock $2,100.
   
Bedford Company purchased a 90% interest in Midway Company on January 1 of the current
year, and the purchase price reflected 90% of Midway's book value of equity. Bedford Company
had $400,000 net income for the current year before recognizing its share of Midway Company's
net income. If Midway Company had net income of $90,000 for the year, what is the consolidated
net income attributable to Bedford shareholders for the year?
 
$481,000

90,000 x .9 = 81,000
400,000 + 81,000 = 481,000
   
The following is an excerpt from Walmart's Form 10‑K for the fiscal year ended January 31, 2019.
A summary of the provision for income taxes is as follows ($ millions):
Current:


U.S. federal                                         $2,763
U.S. state and local                            493
International1,495
Total current tax provision               $4,751
Deferred: U.S. federal                                    $(361)
U.S. state and local                            (16)
International                                      (93)
Total deferred tax expense (benefit) $(470)

Consider the deferred portion of Walmart's tax provision. Which of the following is plausible?


Walmart's deferred tax assets increased during the year.
Walmart's deferred tax liabilities decreased during the year.
Both are plausible.
Neither is plausible.
   
Prepare the journal entry to record Zende Company’s issuance of 82,000 shares of $6
par value common stock assuming the shares sell for: $6 cash per share. and $7 cash per share.
 

   
Snooze Inc. reported a statutory tax rate of 35%, an effective tax rate of 30.5%.
Income before income tax for the year was $641.1 million.
What did the company report as tax expense (on its income statement) for the year?

a. $1,831.7 million
b. $2,102.0 million
c. $224.4 million
d. None of these are correct
e. $195.5 million


641.1 x 0.305 = 195.5
   
Epic Inc. has 11,000 shares of $2 par value common stock outstanding.
Epic declares a 15% stock dividend on July 1 when the stock’s market value is $18 per share.
The stock dividend is distributed on July 20.
Prepare journal entries for (a) declaration and (b) distribution of the stock dividend.
 

   
Belkin Inc. has 101,000 shares of $3 par value common stock outstanding.
Belkin declares a 41% stock dividend on March 2 when the stock’s market value is $73 per share.
Prepare the journal entry for declaration of the stock dividend.
 

   
Stockholders’ equity of Ernst Company consists of 81,000 shares of $5 par value, 9%
cumulative preferred stock and 285,000 shares of $1 par value common stock.
Both classes of stock have been outstanding since the company’s inception. Ernst did not declare
any dividends in the prior year, but it now declares and pays a $130,000 cash dividend at the current
year-end. Determine the amount distributed to each class of stockholders for this two-year-old company.
 

   
On May 3, Zirbal Corporation purchased 4,000 shares of its own stock for $48,000 cash.
On November 4, Zirbal reissued 1,300 shares of this treasury stock for $16,900.
Prepare the May 3 and November 4 journal entries to record Zirbal’s purchase and reissuance of treasury stock.
 

   
Epic Company earned net income of $744,500 this year.
There were 410,000 weighted-average common shares outstanding, and preferred
shareholders received a $27,000 cash dividend.
Epic Company earned net income of $744,500 this year.
There were 410,000 weighted-average common shares outstanding, and
preferred shareholders received a $27,000 cash dividend.
 

   
Compute Topp Company’s price-earnings ratio if its common stock has a market value
of $18.90 per share and its EPS is $3.60.
Considering Lower deck, its key competitor, has a PE ratio of 9.5, which company does
the market have higher expectations of future performance?
 

   
On June 30, Sharper Corporation’s stockholders’ equity section of its balance
sheet appears as follows before any stock dividend or split.
Sharper declares and immediately distributes a 50% stock dividend.
 

Common stock—$10 par value, 120,000 shares authorized, 76,000 shares issued and outstanding	$	760,000
Paid-in capital in excess of par value, common stock		330,000
Retained earnings		725,000
Total stockholders’ equity	$	1,815,000

 
Assume that instead of distributing a stock dividend, Sharper did a 3-for-1 stock split.
Prepare the updated stockholders’ equity section after the split.
 

Compute the number of shares outstanding after the split.
 

   
The stockholders’ equity of TVX Company at the beginning of the day on February 5 follows.
 

Common stock—$25 par value, 150,000 shares authorized, 59,000 shares issued and outstanding	$	1,475,000
Paid-in capital in excess of par value, common stock		425,000
Retained earnings		554,000
Total stockholders’ equity	$	2,454,000

 
On February 5, the directors declare a 2% stock dividend distributable on February 28 to the February 15 stockholders of record.
The stock’s market value is $31 per share on February 5 before the stock dividend.
Prepare entries to record both the dividend declaration and its distribution.
 

   
The stockholders’ equity of TVX Company at the beginning of the day on February 5 follows.
 

Common stock—$25 par value, 150,000 shares authorized, 59,000 shares issued and outstanding	$	1,475,000
Paid-in capital in excess of par value, common stock		425,000
Retained earnings		554,000
Total stockholders’ equity	$	2,454,000

 
On February 5, the directors declare a 2% stock dividend distributable on February
28 to the February 15 stockholders of record.
The stock’s market value is $31 per share on February 5 before the stock dividend.
Prepare the stockholders’ equity section after the stock dividend is distributed.
(Assume no other changes to equity.)
 

   
The equity sections for Atticus Group at the beginning of the year (January 1)
and end of the year (December 31) follow.

Stockholders’ Equity (January 1)
Common stock—$5 par value, 100,000 shares authorized, 40,000 shares issued and outstanding	$	200,000
Paid-in capital in excess of par value, common stock		160,000
Retained earnings		320,000
Total stockholders’ equity	$	680,000

 

Stockholders’ Equity (December 31)
Common stock—$5 par value, 100,000 shares authorized, 47,400 shares issued, 3,000 shares in treasury	$	237,000
Paid-in capital in excess of par value, common stock		211,800
Retained earnings ($50,000 restricted by treasury stock)		440,000
		888,800
Less cost of treasury stock		(50,000	)
Total stockholders’ equity	$	838,800

 
The following transactions and events affected its equity during the year.
 

Jan.		5		Declared a $0.40 per share cash dividend, date of record January 10.
Mar.		20		Purchased treasury stock for cash.
Apr.		5		Declared a $0.40 per share cash dividend, date of record April 10.
July		5		Declared a $0.40 per share cash dividend, date of record July 10.
July		31		Declared a 20% stock dividend when the stock’s market value was $12 per share.
Aug.		14		Issued the stock dividend that was declared on July 31.
Oct.		5		Declared a $0.40 per share cash dividend, date of record October 10.

 
How many common shares are outstanding on each cash dividend date?
 

 
What is the total dollar amount for each of the four cash dividends?
 

 
What is the total dollar amount for each of the four cash dividends?
 

 
What is the per share cost of the treasury stock purchased? (Round your answer to 2 decimal places.)
 

 
How much net income did the company earn this year?
 

    Homework   1.1  1.2   2.1  2.2  3.1  3.2   4.1  4.2  5.1  5.2   6.1   6.2  7.1  7.2  8.1  8.2  9.1  9.2  10.1   10.2  11.1   11.2  12.1  12.2   13.1  13.2