70.2K

Verified Solution

Link Copied!

1. Emma Company provides a 12-month warranty on all their products. During 2016, they had total sales of $700,000, and estimated warranty costs to be 3% of sales. On January 1, 2016, the Estimated Warranty Liability account had a debit balance of $3,000, and it had a credit balance of $5,000 on December 31, 2016. What was the actual cost of repairs covered under warranties during 2016?

	A.	$17,500
	B.	$13,000
	C.	$21,000
	D.	$19,500

2. Western Company estimates warranty expense as 5% of sales. On January 1, 2016 warranties payable was $20,000, and the December 31 liability for the warranty was $22,000. During the year Western recorded sales of $300,000. The amount paid by Western during the year to meet its warranty obligations was:

	A.	$12,000
	B.	$13,000
	C.	$15,000
	D.	$30,000

3. The price of a bond is equivalent to:

I.	Face value
II.	Projected interest payments discounted to the present
III.	The amortization amount of a bond
IV.	The present value of the principal payment

	A.	I + III
	B.	I + II
	C.	I III
	D.	II + IV

4. Bibby Company retired a $900,000, 7% bond issue at 98. If the unamortized discount is $7,200, the entry will include a:

	A.	Debit to loss on bond retirement for $10,800
	B.	Credit to gain on bond retirement for $7,200
	C.	Credit to gain on bond retirement for $10,800
	D.	Debit to loss on bond retirement for $7,200

5. How many payment periods are in an 8-year, 8% bond with an effective interest rate of 6%, and paid semiannually?

	A.	48
	B.	16
	C.	3
	D.	12

6. Findlay Associates has outstanding Bonds Payable, with a par value of $80,000, and carrying value of $77,800. If Findlay purchases the bonds in the open market at a price of 97.0 and retires them, which of the following is true?

	A.	Findlay will recognize a gain of $200
	B.	Findlay will recognize a loss of $200
	C.	Findlay will recognize a gain of $2,200
	D.	Findlay will recognize a loss of $2,20

7. On January 1, Annmarie Company borrowed $60,000 cash by signing an 8 year, 7% mortgage note that requires equal total payments on December 31 of each year. The balance in the Mortgage Note Payable account after the first payment is made is:

	A.	$55,800
	B.	$52,678
	C.	$52,500
	D.	$54,152

8. Kangaroo Company signed a three-month, 8% note on November 1, 2016 for the purchase of $240,000 of inventory. Assuming the companys accounting period ends on December 31, which one of the following statements is not correct?

	A.	On February 1, 2017, the company will debit Interest Expense for $3,200
	B.	On February 1, 2017, the company will debit Interest Payable for $3,200
	C.	On December 31, 2016, the company will debit Interest Expense for $3,200
	D.	On December 31, 2016, the company will credit Interest Payable for $3,200

9. Five Seasons Company has a total payroll of $1,560,000 which is subject to a 7.65% FICA tax. Assuming $360,000 was subject to state and federal unemployment tax rates of 4% and 0.8% respectively, the entry to accrue payroll taxes would include a:

	A.	Debit to FICA tax expense for $23,800
	B.	Credit to FUTA tax payable for $2,880
	C.	Credit to SUTA tax payable for $50,400
	D.	Debit to payroll tax expense for $188,680

10. Dutch Company paid Hamburg Company for merchandise with a $12,800, 90-day, 8% note dated May 10. If Dutch Company pays the note at maturity, what entry should be made at that time?

	A.	Notes Payable 12,800 Interest Expense 256 Cash 12,544
	B.	Notes Payable 12,800 Interest Expense 256 Cash 13,056
	C.	Cash 13,056 Notes Payable 256 Interest Payable 12,800
	D.	Notes Payable 13,056 Interest Payable 256 Cash 12,800

Answer & Explanation Solved by verified expert

See Answer