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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 August 2, 20 13, Jun Co . receives a $6,000, 90-0ay, 12% no te from custom er Ryan Albany as payment on his $6,000 account.
Prepare the journal entry assuming the note is honored by the customer on October 31, 20 13. (Use 360 days a year.)
 

   
Sylvestor Systems borrows $113,000 cash on May 15 by signing a 180-day, 8%, $113,000 note.
On what date does this note mature?
 

 
Prepare the entry to record issuance of the note.
 

 
First, complete the table below to calculate the interest expense at maturity. Use those calculated values to
prepare your entry to record payment of the note at maturity.
 


   
For each separate situation, indicate whether Cruz Company should (a) record a liability, (b) disclose in notes, or (c) have no disclosure.
 

   
Use the following information from separate companies a through d:

	Net Income (Loss)			Interest Expense			Income Taxes
a.	$	156,000		$	88,920		$	39,000
b.		150,600			52,710			54,216
c.		132,600			30,498			55,692
d.		159,100			7,955			76,368

 
Compute times interest earned. Which company indicates the strongest ability to pay interest expense as it comes due?
 

 

   
On January 8, the end of the first weekly pay period of the year, Regis Company’s employees earned $20,760 of office
salaries and $70,840 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 1.45%, $13,460 of federal income taxes, $1,410 of medical insurance
deductions, and $860 of union dues. No employee earned more than $7,000 in this first period.
 
Calculate below the amounts for each of these four taxes of Regis Company.
Regis’s state unemployment tax rate is 5.4% of the first $7,000 paid to each employee.
The federal unemployment tax rate is 0.6%.
 

 
Prepare the journal entry to record Regis Company’s January 8 employee payroll expenses and liabilities.
 

 
Prepare the journal entry to record Regis’s employer payroll taxes resulting from the January 8 payroll. Regis’s state
unemployment tax rate is 5.4% of the first $7,000 paid to each employee. The federal unemployment tax rate is 0.6%.
 

   
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.)
 

   
BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $118,500 paid to its employee, and FICA Medicare
taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA taxes are 2.9% of the first $7,000 paid to its employee.
 

	Gross Pay through August					Gross Pay for September
a.		$	5,600				$	1,500
b.			19,300					3,200
c.			113,300					9,100

 
Compute BMX’s amounts for each of these four taxes as applied to the employee’s gross earnings for September
under each of three separate situations (a), (b), and (c). (Round your answers to 2 decimal places.)
 

   
BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $118,500 paid to its employee, and FICA Medicare
taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA taxes are 2.9% of the first $7,000 paid to its employee.
 

	Gross Pay through August					Gross Pay for September
a.		$	5,400				$	2,400
b.			19,100					3,000
c.			113,100					8,900

 
Assuming situation a, prepare the employer’s September 30 journal entries to record salary expense and its related payroll liabilities for this employee.
The employee’s federal income taxes withheld by the employer are $90 for this pay period. (Round your answers to 2 decimal places.)
 


   
Listed below are a few transactions and events of Maxum Company.
Employees earn vacation pay at a rate of one day per month. During December, 22 employees qualify for one vacation day each.
Their average daily wage is $210 per employee.
During December, Maxum Company sold 3,900 units of a product that carries a 60-day warranty.
December sales for this product total $130,000. The company expects 7% of the units to need warranty repairs, and it estimates
the average repair cost per unit will be $12.
Prepare any necessary adjusting entries at December 31, 2017, for Maxum Company’s year-end financial statements for each of
the above separate transactions and events.
 

   
Lenny Florita, an unmarried employee, works 45 hours in the week ended January 12. His pay rate is $14 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.)
 
 
An employee earned $62,500 during the year working for an employer.
The FICA tax rate for Social Security is 6.2% of the first $118,500 of employee earnings per calendar year and the FICA tax rate for Medicare
 is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first
 $7,000 of an employee’s pay. What is the amount of total unemployment taxes the employee must pay?
 
$101.50
$56.00
$378.00
$434.00
$0.00
   
If a company has advance ticket sales totaling $2,000,000 for the upcoming football season, the receipt of cash would be journalized as:
 
Debit Sales, credit Unearned Revenue.
Debit Unearned Revenue, credit Sales.
Debit Cash, credit Unearned Revenue.
Debit Unearned Revenue, credit Cash.
Debit Cash, credit Ticket sales payable.
   
All of the following statements regarding liabilities are true except:
 
A liability is a probable future payment of assets or services.
Unearned future wages to be paid to employees should be recorded as liabilities.
For a liability to be reported, it must be a present obligation that results from a past transaction or event.
Information about liabilities is more useful when the balance sheet identifies them as either current or long term.
Liabilities can involve uncertainty in whom to pay.
   
Contingent liabilities must be recorded if:
 
The future event is probable and the amount owed can be reasonably estimated.
The future event is remote.
The future event is reasonably possible but not estimable.
The amount owed cannot be reasonably estimated.
The future event is probable but not estimable.
   
If the times interest earned ratio:
Increases, then risk increases.
Increases, then risk decreases.
Is greater than 1.5, the company is in default.
Is less than 1.5, the company is carrying too little debt.
Is greater than 3.0, the company is likely carrying too much debt.
   
All of the following statements regarding FICA taxes are true except:
 
FICA taxes are deducted from the employee.
Employers must pay withheld FICA taxes to the IRS.
The amount of FICA deducted from the employee is credited to a liability account.
A self-employed person is exempt from FICA taxes.
An employer must pay FICA taxes equal to the amount withheld from the employee.
   
Athena Company provides employee health insurance that costs $5,000 per month. In addition,
the company contributes an amount equal to 5% of the employees’ $120,000 gross salary to a retirement program.
The entry to record the accrued benefits for the month would include a:
 
Debit to Medical Insurance Payable $5,000.
Debit to Employee Retirement Program Payable $6,000.
Debit to Employee Benefits Expense $11,000.
Credit to Employee Benefits Expense $11,000.
Debit to Payroll Taxes Expense $11,000.
   
Interest expense is not:
 
Incurred on current liabilities.
Likely to stay the same when sales change.
A fixed expense.
Likely to fluctuate when sales change.
A factor in determining a company’s borrowing risk.
   
The deferred income tax liability:
 
Results from the income tax expense reported on the income statement differing from the amount of income taxes payable to the government.
Is a contingent liability.
Can result in a deferred income tax asset.
Is never recorded.
Is recorded whether or not the difference between taxable income and financial accounting income is permanent or temporary.
   
Furniture World is required by law to collect and remit sales taxes to the state.
If Furniture World has $78,000 of cash sales that are subject to a 6% sales tax, what is the journal entry to record the cash sales?
 
Debit Cash $82,680; credit Sales $78,000; credit Sales Taxes Payable $4,680.
Debit Sales Taxes Payable $4,680; debit Cash $73,220; credit Sales $78,000.
Debit Cash $78,000; credit Sales $78,000; and record the taxes when paid.
Debit Cash $78,000; credit Sales $73,320; credit Sales Taxes Payable $4,680.
Debit Accounts Receivable $82,680; credit Sales $78,000; credit Sales Taxes Payable $4,680.
   
Warner Furniture Center had accounts receivable of $30,000 at the beginning of the year and $55,000 at year-end.
Revenue for the year totaled $117,000. How much cash did the business collect from customers?
 
$92,000
 
 
117,000 + 30,000 - 55,000 = 92,000
   
Celeron, Inc. expects net cash flow from operating activities to be $110,000, and the company plans purchases of equipment
of $83,000 and repurchases of stock of $24,000.
What is Celeron's free cash flow?
 
$27,000
 
(110,000 - 83,000 - 0 = 27,000)

    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