ACCOUNTING

PART 2 :

QUESTIONS : Q26 TO Q50 :

 

26.

In the process of reconciling Marks Enterprises’ bank statement for September, Mr. Marks compiles the following information:

 

Cash balance per company books on September 30$ 6,270

Deposits in transit at month-end$ 1,310

Outstanding checks at month-end$    630

Bank charge for printing new checks $   50

Note receivable and interest collected by bank on Marks’ behalf $   760

A check given to Marks during the month by a customer is returned

by the bank as NSF$   490

 

The adjusted cash balance per the books on September 30 is:

 

$6,980

$6,490

$4,550

$5,830

$8,150

27.

On December 31 of the current year, a company’s unadjusted trial balance included the following: Accounts Receivable, debit balance of $97,900; Allowance for Doubtful Accounts, credit balance of $1,031. What amount should be debited to Bad Debts Expense, assuming 6% of outstanding accounts receivable at the end of the current year will be uncollectible?

$4,843.

$1,031.

$6,905.

$5,874.

$3,951.

28.

A company has $102,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 6% of outstanding receivables are uncollectible. The current debit balance (before adjustments) in the allowance for doubtful accounts is $920. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:

$5,200

$6,120

$7,040

$920

None of these

29.

A company that uses the net method of recording invoices made a purchase of $900 with terms of 3/10, n/30. The entry to record the purchase would include:

 

A credit to Cash for $873.

A debit to Cash for $873.

A credit to Discounts Lost for $27.

A debit to Merchandise Inventory for $873.

A debit to Discounts Lost for $27.

30.

The interest accrued on $5,500 at 8% for 45 days is (Use 360 days a year. Do not round intermediate calculations):

$44.

$51.

$220.

$513.

$55.

31.

Marble Company purchased a machine costing $134,000, terms 3/10, n/30. The machine was shipped FOB shipping point and freight charges were $3,400. The machine requires special mounting and wiring connections costing $11,400. When installing the machine, $2,700 in damages occurred. Materials costing $2,900 are used in testing and adjusting the machine to produce a satisfactory product. Compute the cost recorded for this machine assuming Marble paid within the discount period.

$144,280.

$150,380.

$144,980.

$147,680.

$154,400.

32.

An employee earned $45,600 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 employee’s annual FICA taxes amount is:

$3,488.40.

$6,976.80.

$661.20.

Zero, since the employee’s pay exceeds the FICA limit.

$2,827.20.

33.

 

 

 

 

During August, Arena Company sells $363,000 in product that has a one year warranty. Experience shows that warranty expenses average about 4% of the selling price. The warranty liability account has a balance of $13,500 before adjustment. Customers returned product for warranty repairs during the month that used $10,100 in parts for repairs. The entry to record the customer warranty repairs is:

 

 

pastedGraphic.pdf Debit Estimated Warranty Liability $10,100; credit Parts Inventory $10,100.
pastedGraphic.pdf Debit Warranty Expense $14,520; credit Estimated Warranty Liability $14,520.
pastedGraphic_1.pdf Debit Estimated Warranty Liability $14,520; credit Parts Inventory $14,520.
pastedGraphic_1.pdf Debit Warranty Expense $10,100; credit Estimated Warranty Liability $10,100.
pastedGraphic.pdf Debit Warranty Expense $11,120; credit Estimated Warranty Liability $11,120.

 

 

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