accounting questions 402883

1. Liabilities: Must always have a definite date for payment Must sometimes be estimated Must be certain Must involve an outflow of cash Must be for a specific amount 2. Mission Company has three employees: The company is subject to the following taxes: What is Mission Company’s amount for payroll taxes for Clark? $812.20 $1,814.35 $6,234.75 $946.35 $1,002.15 3. The FICA tax for social security is 6.2% and the FICA tax for Medicare is 1.45%. An employee’s share of both FICA taxes was $3,901.50. Given that this employee did not exceed the FICA earnings limitation, compute gross pay. $269,068.96 $29,846.48 $51,000 $62,927.42 Zero, since the employee’s pay did not exceed the FICA limit 4. The amount of federal income taxes withheld from an employee’s paycheck is determined by: The employee’s annual earnings rate and number of withholding allowances The employee’s credit rating Multiplying the gross pay by 6.2% The amount of social security taxes The employer’s merit rating 5. If Jefferson Company paid a bonus equal to 6% of net income after bonuses and the total bonus distributed was $330,000, how much was net income for the year? $5,035,000 $5,830,000 $6,500,000 $4,480,000 $5,500,000 6. Most employees and employers are required to pay: Federal payroll taxes Both B and C only Local, state and federal payroll taxes State payroll taxes Local payroll taxes 7. Mission Company has three employees: Gross Pay through July Gross Pay for August Smith $3,750 $1,550 Cain 26,900 4,050 Clark 95,700 14,200 ________________________________________ The company is subject to the following taxes: Tax Rate Applied To FICA”Social Security 6.20% First $106,800 FICA”Medicare 1.45 All gross pay FUTA 0.80 First $7,000 SUTA 5.40 First $7,000 ________________________________________ What is Mission Company’s amount for payroll taxes for Smith for the month of August? $96.10 $519.38 $214.68 $734.05 $118.58 8. If a company had net income of $1,486,875 a times interest earned ratio of 4.0, a tax rate of 35%, and operating income of 3,050,000, what would the company’s interest expense be for the year? $762,500 $1,067,500 $725,329 $1,564,000 $371,719 9. A company estimates that warranty expense will be 2% of sales. The company’s sales for the current period is $187,000. The current period’s entry to record the warranty expense is: Warranty Expense 3740 Estimated Warranty Liability 3740 No entry is recorded until the items are returned for warranty repairs. Warranty Expense 3740 Sales 3740 Warranty Liability 3740 Cash 3740 Estimated Warranty Liability 3740 Estimated Warranty Expense 3740 10. Mission Company has three employees: The company is subject to the following taxes: What is the amount that Mission Company will withhold from Smith’s gross pay? $138.50 $62.00 $443.20 $581.70 $76.50 11. A company has bonds outstanding with a par value of $100,000. The unamortized discount on these bonds is $4,500. The company retired these bonds by buying them on the open market at 97. What is the gain or loss on this retirement? $3,000 loss $1,500 gain $3,000 gain $1,500 loss $0 gain or loss 12. On January 1, 2010, Jacob issues $600,000 of 11%, 15 year bonds at a price of 102A??1. Six years later, on January 1, 2016, Jacob retires 30% of these bonds by buying them on the open market at 98A??1. All interest is accounted for and paid through December 31, 2015, the day before the purchase. The straight line method is used to amortize any bond discount. What is the journal entry to record the first interest payment on June 30, 2010? 1 Interest expense 33k Disc on bonds payable 500 Cash 32.5k 2 InterestExpesnse 32.5k Premium on bonds payable 500 Cash 33k 3 Interest Expense 33k Cash 33k 4 Cash 33k Interest Expense 33k 5 Interest Expense 32.5k Disc on Bonds Payable 500 Cash 33k 13. A corporation issued 8% bonds with a par value of $1,000,000, receiving a $20,000 premium. On the interest date 5 years later, after the bond interest was paid and after 40% of the premium had been written off, the corporation purchased the entire issue on the open market at 99 and retired it. The gain or loss on this retirement is: $10,000 gain $0 $22,000 gain $22,000 loss $10,000 loss 14. The market value of a bond is equal to: The present value of all future cash payments provided by a bond The present value of all future interest payments provided by a bond The future value of all future interest payments provided by a bond The present value of the principal for an interest bearing bond 15. The future value of all future cash payments provided by a bond A company borrowed $50,000 cash from the bank and signed a 6 year note at 7%. The present value factor for an annuity for 6 years at 7% is 4.7665. The annual annuity payments equal $10,490. The present value of the loan is: $11,004 $50,000 $52,450 $238,325 $10,490 16. A company has bonds outstanding with a par value of $400,000. The unamortized premium on these bonds is $2,000. The company retired these bonds by buying them on the open market at 97. What is the gain or loss on this retirement? $14,000 gain $0 gain or loss $10,000 loss $14,000 loss $10,000 gain 17. The contract between the bond issuer and the bondholders, which identifies the rights and obligations of the parties is called a(n): Bond indenture Mortgage contract Mortgage Installment note Debenture 18. On January 1, 2010, Jacob issues $800,000 of 9%, 13 year bonds at a price of 96A??1. Six years later, on January 1, 2016, Jacob retires 20% of these bonds by buying them on the open market at 105A??1. All interest is accounted for and paid through December 31, 2015, the day before the purchase. The straight line method is used to amortize any bond discount. What is the total interest expense for the life of the bond? $963,000 $772,000 $964,000 $936,000 $844,000 19. When a bond sells at a premium: The contract rate is above the market rate The contract rate is below the market rate The contract rate is equal to the market rate It means that the bond is a zero coupon bond The bond pays no interest 20. A company issued 10 year, 12% bonds with a par value of $200,000. The company received $195,868 for the bonds. Using the straight line method, the amount of interest expense for the first semiannual interest period is: $12,334.60. $12,000.00. $12,206.60. $24,206.60. $24,000.00.