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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

Lyon Co. collected $1,200 in sales tax from customers during the month of March. In April, Lyon sent
the $1,200 sales tax to the state government. The entry to record payment to the state would include
which of the following?
 
Credit to Cash
Debit to Sales Tax Payable
   
On January 1, Avers Co. borrowed $10,000 cash from Main St. Bank by signing a 60-day, 8% interest-bearing
note. On March 1, Avers pays the amount due in full. This entry would be recorded by Avers with a debit
to _________________ in the amount of _______
 
Notes payable; $10,000
   
A ________ liability is an obligation due to be paid or settled within one year or the company's operating
cycle, whichever is longer
 
Current
   
John Grey owns Grey's Snow Plowing. In October, Grey's collects $12,000 cash for 6 commercial accounts
for which he will provide snowplowing for the entire season. To record this transaction,
Grey will enter which of the following entries?
 
Debit cash
Credit to Unearned Plowing Revenue
   
In order for a contingent liability to be recorded as a journal entry in the financial statement, it must
be __________ and reasonably estimable.
 
Probable
   
On November 1, Lance Co. borrows $90,000 cash from First Bank by signing a 90-day, 5% interest- bearing
note. On December 31, Lance will record an adjusting entry by crediting ____________ in the amount of ______________.
 
Interest Payable; $750

90,000 x .05 = 4,500
4,500 x 2 / 3 = 750
   
Patel Paving collected $1,000 cash in advance from a customer to provide paving services next
month. The entry to record this cash receipt would include the following entries?
 
Debit to cash
Credit unearned paving fees
   
On January 8, Lee Co. borrows $100,000 cash from National Bank by signing a 90- day, 6% interest bearing
note. On April 8, Lee Co. will pay National Bank a total of $101,500. Principal on the note totals $______.
 
The principal is 100,000
   
When recording a liability, a company may not know
whom to pay
when to pay
how much to pay
   
Fortiz Co. receives $85 for the sale of merchandise with a sale price of $80 and sales tax of $5.
The entry to record the $5 sales tax would require which of the following?
 
Credit to Sales Tax Payable
   
On November 1, Wright Co. borrowed $20,000 cash from Third Bank by signing a 90 day, 6% interest bearing
note. On December 31, Wright recorded an adjusting entry to interest expense of $200. On January 30, the due
 date of the note, Wright will record the payment with a debit to Interest Expense in the amount of $_______
20,000.0630/360=100
   
On January 1, KC co. borrowed $10,000 cash from Lake St. Bank by signing a 90- day, 8% interest- bearing
note. How much interest will result from this note?


200
 
10,000 x 0.8 = 800
360 / 90 = 4
800 / 4 = 200
   
A written promise to pay a specified amount on a definite future date within one year or the company's
operating cycle, whichever is longer, is considered a ____________.
 
short-term note payable
   
A liability created by buying goods or services on credit is typically recorded to_______
 
accounts payable
   
Niwa Co. replaced a $3,000 account payable balance to Fiona Co. with a 60-day, $3,000 note bearing
5% annual interest. Niwa's entry to record this transaction would include which of the following entries?
 
Credit to notes payable
Debit to accounts payable
   
Bushra Co. replaced a $1,000 account payable balance to Elin Co. with a 120- day, $1,000 note bearing
8% annual interest. Bushra's entry to record this transaction would include a credit to which account?
 
Notes Payable
   
A _________ is a probable future payment of assets or services that a company is presently obligated to
make as a result of past transactions or events.
 
liability
   
On July 1, Scene Co. borrowed $15,000 cash from First Bank by signing a 30-day, 5% interest-bearing note.
Scene will record this entry with a credit to Notes Payable in the amount of $__________
 
$15,000
   
On December 1, Hansen Co. borrows $100,000 cash from National Bank by signaling a 90-day, 6% interest-bearing note. On December 31, Hansen will record an adjusting entry by debiting interest expense in the amount of ____________.
 
$500
 
100,000 x .06 x 30 / 360 = 500
   
Brina Consulting Co. collected $500 from a customer in advance to provide consulting fees for the
next two months. The $500 would be recorded with a debit to cash and a credit to the Unearned
Revenues, which is a (n)________________ account.
 
Liability
   
A(n) (asset/liability/revenue) is a probable future payment of assets or services that a company is
presently obligated to make as a result of past transactions or events.
 
liability
   
A (long-term/current) liability is a liability due within one year or the company's operating cycle, whichever is longer.
 
current
   
Ace Company borrowed $10,000 from Fair Rates Bank by signing a two-year note payable.
Ace's operating cycle is 14 months. This note would be considered a ______ on the balance sheet.
 
long-term liability
   
A liability can be recorded, even if there is uncertainty of when to pay, how much to pay, or whom to pay.
 
true
   
A measurable obligation arising from agreements, contracts, or laws is called a _____ liability.
 
known
   
When a company has a current obligation to make a future payment to their supplier due to a shipment
of supplies that were received last week, the company would record this transaction with an increase
to an asset account and a(n) _____ account
 
liability
   
Spot Co. purchases office supplies from Sally Supplies, Inc.. Spot does not pay cash for the purchase, and
now owes the amount to Sally. This transaction would typically be recorded in which account in Spot's books?
 
Accounts Payable
   
Which of the following items would be considered a current liability? (Check all that apply.)
 
Wages payable
Notes payable, due in 3 months
Accounts payable, terms n/30
   
Obligations due after one year or one operating cycle, whichever is longer, are considered to be:
 
long-term liabilities.
   
When recording a liability, a company may /not /know: (Check all that apply.)
 
how much to pay.
when to pay.
whom to pay.
   
A known liability is a measurable obligation arising from agreements, contracts, or laws.
Known liabilities would include all of the following items, except:
 
warranties
   
A liability created by buying goods or services on credit is typically recorded to
 
accounts payable
   
Bryne Co. sells merchandise and collects a 5% state sales tax. The tax is recorded on Bryne's
general ledger as a(n) ____ account
 
liability
   
Damen's Co. sells merchandise with a list price of $500 and collects sales tax of $50. The sales tax
would be recorded with a credit to which account?
 
Sales Tax Payable
   
Tire Co. collected $2,000 in sales tax during the month of October. The entry that shows the remittance
of this sales tax to the state government in November would include a credit to the ____ account.
 
cash
   
______ are amounts owed to suppliers for products or services purchased on credit.
Accounts payable
   
Amounts received in advance from customers for future products or services are typically recorded
in a liability account called
 
Unearned Revenues
   
A written promise to pay a specified amount on a stated future date within one year or the company's
operating cycle, whichever is longer, is considered a
 
short-term note payable
   
Patel Paving collected $1,000 cash in advance from a customer to provide paving services next month.
The entry to record this cash receipt would include the following entries? (Check all that apply.)
 
Credit to Unearned Paving Fees Earned
Debit to Cash
   
John Grey owns Grey's Snow Plowing. In October, Grey's collects $12,000 cash for 6 commercial
accounts for which he will provide snowplowing for the entire season. To record this transaction,
Grey will enter which of the following entries? (Check all that apply.)
 
Credit to Unearned Plowing Revenue
Debit to Cash
   
A company sells 12-month subscriptions to popular magazines. During the month of May, the company
sells $10,000 in magazines, which will start in June. The journal entry to record the sales not yet earned
will include a credit to which account?
 
Unearned Subscription Revenue
   
Zion Co. sells $100 of merchandise and collects $10 sales tax. The sales tax is recorded to which account?
 
Sales tax payable
   
KRS Co. sells merchandise for $120 and collects sales tax of $12. KRS would record the $12
sales tax with a credit to the Sales Tax _____ account
 
payable
   
John Grey owns Grey's Snow Plowing. In October, he collects $12,000 cash for 6 commercial accounts
for which he will provide snowplowing for the next three months. John recorded the cash collection as
an unearned revenue. To record the adjusting entry in November, when $4,000 has been earned,
Grey will enter which of the following entries? (Check all that apply.)
 
Credit to Plowing Revenue Earned
   
Lyon Co. collected $1,200 in sales tax from customers during the month of March. In April, Lyon sent the
$1,200 sales tax to the state government. The entry to record payment to the state would include which
of the following? (Check all that apply.)
 
Credit to Cash
Debit to Sales Tax Payable
   
Bushra Co. replaced a $1,000 account payable balance to Elin Co. with a 120-day, $1,000 note bearing 8%
annual interest. Bushra's entry to record this transaction would include a credit to which account?
 
Notes Payable
   
On January 1, Avers Co. borrowed $10,000 by extending their past-due account payable with a a 60-day,
8% interest-bearing note. On March 1, the due date, Avers pays the amount due in full. This entry would
be recorded by Avers with a debit to (Accounts Payable/Notes Payable/Cash) in the amount of
 
Notes Payable; $10,000
   
A company sells 12-month popular magazine subscriptions. During the month of May, the company sells
$12,000 in magazines, which will start in June. The adjusting entry to record the $1,000 of subscriptions
earned in June will include a /debit /to which account?
 
Unearned Subscription Revenue
   
Winn Co. signs a 60-day note payable for a $15,000 copy machine with an interest rate of 8%.
Winn will record total interest expense of
 
$200
 
15,000 x .08 x 60 / 360) = 200.
   
Cadie Construction Co. signed a note promising to pay a cement supplier $1,000 60 days from now.
As a result of this transaction, Cadie would record a(n) _____ on her balance sheet
 
short-term note payable
   
On January 8, Lee Co. borrows $100,000 cash from National Bank by signing a 90-day, 6% interest note.
On April 8, Lee Co. will pay National Bank a total of $101,500. The difference between the amount paid back
to National Bank of $101,500 and the amount borrowed of $100,000 (or $1,500) represents _____ expense
 
interest
   
Amounts received in advance from customers for future products or services are typically recorded in a
liability account called
 
Unearned Revenues
   
On January 8, Lee Co. borrows $100,000 cash from National Bank by signing a 90-day, 6% interest note.
On April 8, Lee Co. will pay National Bank a total of $101,500. Principal on the note totals $
 
100,000
   
Niwa Co. replaced a $3,000 account payable balance to Fiona Co. with a 60-day, $3,000 note bearing
5% annual interest. Niwa's entry to record this transaction would include which of the following entries?
(Check all that apply.)
 
Credit to Notes Payable
Debit to Accounts Payable
   
On March 1, Young Co. borrowed $1,000 by extending their past-due account payable with a 120-day, 6%
interest-bearing note. On June 29, the due date, Young pays the amount due in full. This entry would be
recorded by Young with a credit to
 
Cash; $1,020
 
Interest is computed for 120 days.
$1,000 x .06 x 120 / 360 = 20.
Cash will be credited for $1,000 + 20.
   
On June 1, Button Co. borrowed $1,000 cash from National Bank by signing a 120-day, 6% interest-bearing
note. Button will record this transaction with a credit to ____ in the amount of
 
Notes Payable; $1,000
   
Sheldon has a $15,000 liability for a machine that has an interest rate of 10%.
The interest expense for one year is?
 
$1,500
$15,000 x .10 = $1,500
   
On June 1, Sawyer Co. borrowed $5,000 cash from Crystal Bank by signing a 45-day, 12% interest-bearing
note. On July 16, Sawyer pays the amount due in full. Sawyer would record this payment with a
(debit/credit) to interest expense in the amount of
 
debit; $75
 
Interest expense is debited for $75 computed as $5,000x.12x(45/360). The
credit is to Cash for $5,075.
   
is the difference between the amount borrowed and the amount repaid.
interest
   
On November 1, Lance Co. borrows $90,000 cash from First Bank by signing a 90-day, 5% interest-bearing
note. On December 31, Lance will record an adjusting entry by crediting ____ in the amount of ____
 
Interest Payable; $750
 
The computation of interest is $750 from November 1 to December 31 which is 60 days.
90,000 x .05 x 60 / 360) = 750.
   
The (principal/maturity) of a note is the amount that the signer of a note agrees to pay back when it matures,
not including interest.
principal
   
On November 1, Wright Co. borrowed $20,000 cash from Third Bank by signing a 90-day, 6% interest-bearing
note. On December 31, Wright recorded an adjusting entry to interest expense of $200. On January 30, the
due date of the note, Wright will record the payment with a debit to Interest Expense in the amount of $
 
100
   
______ is(are) the total compensation an employee earns including wages, salaries, commissions,
bonuses, and any compensation earned before deductions such as taxes.
 
Gross pay
   
On July 1, Scene Co. borrowed $15,000 cash from First Bank by signing a 30-day, 5% interest-bearing
note. Scene will record this entry with a credit to Notes Payable in the amount of $
 
15,000
   
Gross pay minus all deductions—including federal and state taxes, FICA and any voluntary deductions equals ____ pay
 
net
   
On December 1, Hansen Co. borrows $100,000 cash from National Bank by signing a 90-day, 6% interest-bearing
note. On December 31, Hansen will record an adjusting entry by debiting interest expense in the amount of
 
$500
 
100,000 x 0.06x 30 / 360 = 500.
   
Amounts withheld from an employee's gross pay are called:
payroll deductions
   
On December 1, Campbell Co. borrowed $10,000 cash from Second Bank by signing a 90-day, 6% interest-
bearing note. On December 31, Campbell accrued interest expense of $50. Campbell does not use reversing
entries. On March 1, the due date of the note, Campbell will record the payment with debit entries to which
of the following accounts? (Check all that apply.)
 
Notes Payable for $10,000
Interest Expense for $100
Interest Payable for $50
   
Jorge Lopez worked 40 hours this week and earned $1,000 in total compensation. Federal and state taxes
and other withholdings totaled $350. Jorge's gross pay totals $
 
1,000
   
The Federal Insurance Contributions Act provides retirement, disability, survivorship, and medical benefits to
qualified workers. Laws require employers to withhold ______ taxes from employees' pay to cover costs of the system.
 
FICA
   
Jorge Lopez worked 40 hours this week and earned $1,000. Federal and state taxes, and other withholdings
totaled $350. Jorge's net pay totals $
 
650
   
Amounts withheld from employee's earnings for employee income tax is considered a Blank______
by the employer until the government is paid.
 
current liability
   
On March 1, Young Co. borrowed $1,000 cash from Superior Bank by signing a 120-day, 6% interest-bearing
note. On June 29, Young pays the amount due in full. This entry would be recorded by Young with a credit
to______ in the amount of ______.
 
Cash; $1,020
 
Interest is computed for 120 days. $1,000 x .06 x (120/360) = $20.
Cash will be credited for $1,000 + 20.
   
Which of the following is a true statement concerning the employer FICA taxes:
 
The employer must pay FICA tax in an amount equal to that paid by the employee.
   
Employee income tax depends on: (Check all that apply.) employee's income
 
number of employee withholding allowances
   
Federal government taxes implemented on employers in order to provide unemployment benefits
to qualified workers are known as (use acronym)
 
FUTA
   
Examples of employee voluntary deductions may include all of the following except:
 
unemployment taxes.
   
State unemployment taxes imposed on employers in order to provide unemployment benefits
to qualified workers are known as:
 
SUTA
   
Unemployment taxes are examples of (employee/employer) required taxes.
 
employer
   
Which of the following liabilities could be a multi-period known liability? (Check all that apply.)
Notes Payable
Unearned Subscription Revenues
   
FICA tax includes both Social Security tax and
Medicare tax
   
The federal government requires that employers are taxed on employee wages to provide unemployment
benefits to qualified workers. These taxes are known as:
 
FUTA
   
Woods Co. has a note payable due in monthly installments over the next five years. This note will be reported under
which of the following categories of the balance sheet? (Check all that apply.)
 
current liabilities
long-term liabilities
   
State unemployment taxes imposed on employers in order to provide unemployment benefits to qualified
workers are known as (use acronym)
 
SUTA
   
A known obligation of an uncertain amount that can be reasonably estimated is called a(n) ____ liability
 
estimated
   
Unearned subscription revenues that extends over multiple periods is an
example of a _____ known liability
 
multi-period
   
Employers often withhold amounts from employees' earnings which arise from employee requests, contracts, unions,
or other agreements. These withholdings are called employee______ and include items such as medical premiums.
 
voluntary deductions
   
Which of the following items is /not/ a payroll deduction?
Net pay
   
Employers must pay employee taxes in addition to those paid by the employees.
Which of the following is paid only by the employer?
 
Unemployment
   
On December 1, Hansen Co. borrowed $100,000 cash from National Bank by signing a 90-day, 6%
interest-bearing note. On December 31, Hansen recorded an adjusting entry to record interest expense
of $500. On March 1, the due date of the note, Hansen will record interest expense as a
(debit / credit) _____ in the amount of ______.
 
debit; $1,000
 
90 days note. 30 days of interest was recorded at December 31. 60 days of interest is recorded on 3/1.
$100,000 x .06 x (60/360) = $1,000. Debit interest expense for $1,000.
   
Leo Calvin is required to have ______ taxes withheld from his pay in order to cover the cost of future
retirement, disability, survivorship and medical benefits.
 
FICA
   
Employee ______ are perks that are provided in addition to salaries and wages, such as all or part
of medical, dental, life and disability insurance.
 
benefits
   
Paid absences offered to employees are called (pension/vacation) benefits
vacation
   
Damien Co. has $10,000 of unearned revenues on its balance sheet. Damien expects that it will earn $8,000
of these revenues in the upcoming twelve months. How much will be recorded in Long-Term Liabilities?
 
$2,000
 
$2,000. $8,000 is reported in the current liabilities section.
   
Angela Bennett is an employee of Marks Co. This past year, Angela received 1% of Marks net income,
in addition to her annual salary. This added benefit is called a:
 
bonus plan
   
A (repair/warranty) is a seller's obligation to replace or fix a product (or service) that fails to
perform as expected within a specified period.
 
warranty
   
A(n) ______ liability is a known obligation that is of an uncertain amount but that can be reasonably estimated.
 
estimated
   
Boyd's Bicycle Sales and Repairs Co. offers a 6-month warranty on all new bicycle purchases.
Based on history, Boyd determines that warranty repairs are equal to approximately 2% of sales.
During the month, Boyd sales total $20,000. Boyd will record Warranty Expense in the amount of
 
$400
   
Which of the following items are considered employee benefits? (Check all that apply.)
 
Pension plans
Medical insurance
   
Which of the following situations would /not /be required to be recorded in the financial statements
or reported as a note to the financial statements?
 
The liability is remote and estimated to be $30,000.
   
Abby Co. allows each employee two weeks of paid time off during each calendar year. Since employees
are working for 50 weeks, rather than 52 weeks, Abby must accrue the paid time off during the 50 weeks
that the employees work. The year-end adjusting entry is recorded as a credit to the
 
Vacation Benefits Payable
   
When a company guarantees the payment of debt owed by a supplier, customer or another company,
the guarantor usually discloses the guarantee as a (known/contingent) liability
 
contingent
   
A______ is when an employer provides employees with a percentage of the company's net income earned during the year.
 
bonus plan
   
Which of the following situations is not a contingent liability?
Future natural disaster
   
Simar Sales Co. sells and installs kitchen appliances. Simar guarantees parts and labor for one year
after installation. Simar would record potential claims in a(n) ____ account
 
Estimated Warranty Liability
   
Trighton's Trailer Co. sells trailers and provides a one-year warranty on all new trailer sales. Based on
history, Trighton anticipates that 2% of trailers will be returned and will have a warranty cost of $100
per trailer. During the month, Victor sold 300 trailers for a total of $255,000. At the end of the month,
Trighton will record $____ in warranty expense
 
600
   
Which of the following contingent liabilities would require a company to record a note to the financial statements?
(Check all that apply.)
 
The liability is probable and cannot be reasonably estimated.
The liability is possible and cannot be reasonably estimated.
The liability is possible and is estimated to be $35,000.
   
A potential legal claim is recorded only if payment for damages is probable, and the amount can be reasonably
 
estimated.
   
Keys Co. is located in Florida. An evacuation has been ordered due to Hurricane Edward, which is headed
in the direction of Keys. Keys should record a contingent liability prior to the evacuation.
 
False
   
Which of the following liabilities could be a multi-period known liability?
 
Unearned Subscriptions Revenues
Notes Payable
   
On June 1, Sawyer Co. borrowed $5,000 cash from Crystal Bank by signing a 45-day, 12% interest-bearing
note. On July 16, Sawyer pays the amount due in full. Sawyer would record this payment with a ______ to
interest Expense in the amount of __________.
 
debit; 75
   
KRS Co. sells merchandise for $120 and collects sales tax of $12. KRS would record the $12
sales tax with a credit to the Sales Tax _____________ account
 
Payable
   
Which of the following represent reasonably possible contingent liabilities?
 
Debt guarantees
potential legal claims
   
FICA and unemployment taxes are examples of _______________ taxes
employer
   
The federal government requires that employers are taxed on employee wages to provide unemployment
benefits to qualified workers. These taxes are known as:
 
FUTA
   
Employer taxes, such as SUTA, are recorded with a debit to Employer Tax Expense and a credit to
SUTA _________ until payments are submitted to the state.
 
Payable
   
Which of the following is not a payroll deduction?
 
Net pay
   
The federal Social Security system provides retirement, disability, survivor ship, and medical benefits
to qualified workers. Laws require employers to withhold ______ taxes from employees' pay to cover
costs of the system.
 
FICA
   
Ace Company borrowed $10,000 from Fair Rates Bank by signing a two-year note payable. Ace's operating
cycle is 14 months. This note would be considered ______ on the balance sheet.
 
long-term liability
   
Employers often withhold other amounts form employees' earnings which arise from employee request,
contracts, unions, or other agreements. These with holdings are called employee __________ and
include items such as medical premiums.
 
voluntary deductions
   
Woods Co. has a note payable due in monthly installments over the next five years. This note will be
reported under which of the following categories of the balance sheet.
 
long-term liabilities
current liabilities
   
The _____ of a note is the amount that the signer of a note agrees to pay back when it matures, not including interest.
 
principal
   
Obligations not due to be paid within one year or one operating cycle, whichever is longer, are considered to be:
 
long-term liabilities
   
Mary's Magazine sales sells popular magazine subscription. During January, Mary collected $1,200
from various customers to provide magazines over the next 12 months. At the end of February,
Mary would make adjusting entry to record one month of magazines subscriptions earned. This
transaction would include which of the following entries?
 
Debit to Unearned Subscriptions
Credit to Subscriptions Earned
   
Zilo Co. has accrued employee salary expense of $1,000 which includes employee with holdings that total
$300. On payday, Zilo will record the payment with which of the following entries?
 
Debit to Salaries Payable for $700
Credit to cash for $700
   
State employment taxes imposed on employers in order to provide unemployment benefits to
qualified workers are known as
 
SUTA
   
Bryne Co. sells merchandise and collects a 5% state sales tax. The tax is recorded on Bryne's general
ledger as a (n)_______ account.
 
liability
   
On January 8, Lee Co. borrows $100,000 cash from National Bank by signing a 90-day, 6% interest-bearing note.
On April 8, Lee Co. will pay National Bank a total of $101,500. The difference between the amount paid back to
National Bank of $101,500 and the amount borrowed of $100,000 (or $1,500) represents __________ expense.
 
interest

    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