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Question(s) / Instruction(s):

A company issues 9%, 20-year bonds with a par value of $750,000. The current market rate is 8%. The amount of interest owed to the bondholders for each semiannual interest payment is.

a)            $33,750

b)            $60,000

c)            $67,500

d)            $30,000

Question 12

            An employee receives an hourly rate of $30, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $300; cumulative earnings for year prior to current week, $105,900 social security tax rate, 6.0% on maximum of $106,800; and Medicare tax rate, 1.5% on all earnings. What is the net pay for the employee?

a)            1059.75

b)            1093.95

c)            1470.00

d)            1359.75

 

Question 13

At the end of the day, the cash register's record shows $1,250, but the count of cash in the cash register is $1,245. The correct entry to record the cash sales is

a)            Debit Cash $1,245; Credit Sales $1,245.

b)            Debit Cash $1,250; credit Sales $1,250.

c)            Debit Cash $1,245; debit Cash Over and Short $5; credit Sales $1,250.

d)            Debit Cash $1,250; credit Sales $1,245, credit Cash Over and Short $5.

Question 14      

          Equipment was purchased for $30,000. It has a useful life of 3 years and a residual value of $1,000. What is depreciation expense for year three under the double-declining-balance method?

a)            6,732

b)            2,288

c)            ,1000

d)            2,468

 

Question 15      

           A company purchased an oil well for $25 million with a residual value of $500,000. It is estimated that 10 million barrels can be extracted from the well. Determine depletion expense assuming 3 million barrels are extracted and sold.

a)            $7,350,000

b)            $7,500,000

c)            $5,000,000

d)            $7,650,000

 

Question 16

Biggo corp buys Jim's Flowers for $350,000 on July 1st 2010; the total net value of the assets is $250,000 so Goodwill is put on the books for $100,000. Biggo has determined that it will keep Jim's flowers in business for 10 years and then make a decision about the future of the business. The amount of Goodwill to amortize is 2010 is;

a)            $0

b)            $100,000

c)            $10,000

d)            $5,000

Question 17      

On January 1 of Year 1, Drum Line Airways issued $3,500,000 of par value bonds for $3,200,000. The bonds pay interest semiannually on January 1 and July 1. The contract rate of interest is 7% while the market rate of interest for similar bonds is 8%. The bond premium or discount is being amortized at a rate of $10,000 every six months. The company's December 31, Year 1 balance sheet should reflect total liabilities associated with the bond issue in the amount of:

a)            $3,220,000

b)            $3,097,500

c)            $3,342,500

d)            $3,780,000

 

Question 18

         The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 5,000 were re acquired as treasury stock. What is the number of shares outstanding?

a)            5,000

b)            100,000

c)            60,000

d)            55,000

Question 19

          A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts:

           

A/R                                                                        $355,000 debit balance

Allowance for Doubtful accounts               $500 credit balances

Net Sales                                                            $800,000 credit balance

            All sales are made on credit. Based on past experience, the company estimates 0.6% of credit sales to be uncollectible. What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared?

a)            $1,275

b)            $1,775

c)            $4,500

d)            $4,800

Question 20      

An employee earned $62,500 during the year working for an employer. The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The current FUTA tax rate is 0.8%, 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?

 

a)            $101.50

b)            $56.00

c)            $378.00

d)            $0

Question 21

Acorn Company has a petty cash fund set up for $500, on July 1st they replenish the fund with the following receipts gas $150, misc expenses $85, office supplies $60, postage $95. Also on July 1st they decide to increase the Petty Cash to $750. On the entries on July 1st they would include a debit to;

a)            Petty Cash   $250

b)            Petty Cash $640

c)            Cash $390

d)            Petty Cash $750

 

 

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