ACCOUNTING

34.

Arena Company provides health insurance to its employees that costs $14,400 per month. In addition, the company contributes 4% of the employees’ $144,000 gross salary to a retirement program. The entry to record the accrued benefits for the month would include a:

Debit to Employee Retirement Program Payable $5,760.

Credit to Employee Benefits Expense $20,160.

Credit to Employee Benefits Expense $14,400.

Debit to Medical Insurance Payable $14,400.

Debit to Employee Benefits Expense $20,160.

 

35.

When originally purchased, a vehicle had an estimated useful life of 8 years. The vehicle cost $25,560 and its estimated salvage value is $3,000. After 4 years of straight-line depreciation, the asset’s total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value. The depreciation expense in year 5 equals:

$2,820.00.

$5,640.00.

$2,988.00.

$5,808.00.

$11,280.00.

36.

Cambria owns equipment that cost $95,300 with accumulated depreciation of $65,200. Cambria asks $35,450 for the equipment but sells the equipment for $33,300. Compute the amount of gain or loss on the sale.

$5,350 gain.

$3,200 loss.

$2,150 gain.

$5,350 loss.

$3,200 gain.

37.

Harvel Company is required by law to collect and remit sales taxes to the state. If Havel has $8,500 of cash sales that are subject to an 7% sales tax, what is the journal entry to record the cash sales?

Debit Cash $9,095; credit Sales $8,500; credit Sales Taxes Payable $595.

Debit Accounts Receivable $9,095; credit Sales $8,500; credit Sales Taxes Payable $595.

Debit Cash $8,500; credit Sales $8,500; and record the sales tax when paid.

Debit Cash $8,500; credit Sales $7,905; credit Sales Taxes Payable $595.

Debit Sales Taxes Payable $595; debit Cash $7,905; credit Sales $8,500.

38.

On November 1, Carter Company signed a 120-day, 10% note payable, with a face value of $18,000. What is the adjusting entry for the accrued interest at December 31 on the note? (Use 360 days a year.)

No journal entry required.

Debit interest expense, $200; credit interest payable, $200.

Debit interest expense, $300; credit interest payable, $300.

Debit interest expense, $400; credit interest payable, $400.

Debit interest expense, $600; credit interest payable, $600.

 

39.

The following information is available on a depreciable asset owned by First Bank & Trust:

 

Purchase date October 1, Year 1

Purchase price  $122,100

Salvage value  $11,700

Useful life  12 years

Depreciation method  straight-line

 

The asset’s book value is $103,700 on October 1, Year 3. On that date, management determines that the asset’s salvage value should be $6,700 rather than the original estimate of $11,700. Based on this information, the amount of depreciation expense the company should recognize during the last three months of Year 3 would be (Do not round intermediate calculations. Round your final answer to two decimal places):

$2,358.04

$2,715.18

$2,132.50

$2,592.50

$2,425.00

 

40.

A company purchased property for $100,000. The property included a building, a parking lot, and land. The building was appraised at $56,000; the land at $49,800, and the parking lot at $19,200. Land should be recorded in the accounting records with an allocated cost of (Do not round intermediate calculations):

$49,800.

$100,000.

$45,840.

$12.

$39,840.

41.

A corporation had 13,500 shares of $5 par value common stock outstanding when the board of directors declared a stock dividend of 4,995 shares. At the time of the stock dividend, the market value per share was $19. The entry to record this dividend is:

Debit Common Stock Dividend Distributable $94,905; credit Retained Earnings $94,905.

Debit Retained Earnings $94,905; credit Common Stock Dividend Distributable $24,975; credit Paid-In Capital in Excess of Par Value, Common Stock $69,930.

Debit Retained Earnings $94,905; credit Common Stock Dividend Distributable $94,905.

Debit Retained Earnings $24,975; credit Common Stock Dividend Distributable $24,975.

No entry is needed.

42.

A company has 2,500 shares of $100 par preferred stock. It also has 20,000 shares of common stock outstanding, and its total stockholders’ equity equals $600,000. The book value per common share is:

$17.50.

$30.00.

$15.56.

$26.67.

$100.00.

43.

Shamrock Company had net income of $33,580. The weighted-average common shares outstanding were 9,200. The company sold 4,200 shares before the end of the year. There were no other stock transactions. The company’s earnings per share is:

$33.58.

$2.51.

$8.00.

$6.72.

$3.65.

44.

The partnership agreement for Smith Wesson & Davis, a general partnership, provided that profits be shared between the partners in the ratio of their financial contributions to the partnership. Smith contributed $140,000, Wesson contributed $84,000 and Davis contributed $28,000. In the partnership’s first year of operation, it incurred a loss of $247,500. What amount of the partnership’s loss, should be absorbed by Smith? (Do not round your intermediate calculations and round your final answer to the nearest whole dollar amount.)

$82,500

$123,750

$61,875

$137,500

$27,500

45.

Badger and Fox are forming a partnership. Badger contributes a building that has a market value of $332,000; the partnership assumes responsibility for a $116,000 note secured by a mortgage on the property. Fox invests $91,000 in cash and equipment that has a market value of $66,000. For the partnership, the amounts recorded for total assets and for total capital account are:

Total assets $373,000; total capital $373,000.

Total assets $489,000; total capital $373,000.

Total assets $605,000; total capital $605,000.

Total assets $489,000; total capital $489,000.

Total assets $373,000; total capital $489,000.

46.

Smith, West, and Krug form a partnership. Smith contributes $204,000, West contributes $170,000, and Krug contributes $306,000. Their partnership agreement calls for a 6% interest allowance on the partner’s capital balances with the remaining income or loss to be allocated equally. If the partnership reports income of $208,800 for its first year, what amount of income is credited to Krug’s capital account?

$56,000.

$68,240.

$69,600.

$74,360.

$66,200.

47.

A corporation declared and issued a 5% stock dividend on November 1. The following information was available immediately prior to the dividend:

 

Retained earnings $710,000

Shares issued and outstanding 56,000

Market value per share $19

Par value per share $5

 

The amount that contributed capital will increase (decrease) as a result of recording this stock dividend is:

$0.

$53,200.

$(14,000).

$(53,200).

$14,000.

48.

Smith, West, and Krug form a partnership. Smith contributes $198,000, West contributes $165,000, and Krug contributes $297,000. Their partnership agreement calls for the income or loss division to be based on the ratio of capital invested. If the partnership reports income of $167,000 for its first year, what amount of income is credited to Smith’s capital account? (Do not round your intermediate calculations.)

$55,667.

$75,150.

$57,600.

$41,750.

$50,100.

49.

The following data were reported by a corporation:

 

Authorized shares40,000

Issued shares35,000

Treasury shares13,500

 

The number of outstanding shares is:

26,500.

35,000.

53,500.

40,000.

21,500.

50.

Mack, Harris, and Huss are dissolving their partnership. Their partnership agreement allocates income and losses equally among the partners. The current period’s ending capital account balances are Mack, $15,400, Harris, $15,400, Huss, $(2,400). After all the assets are sold and liabilities are paid, but before any contributions to cover any deficiencies, there is $28,400 in cash to be distributed. Huss pays $2,400 to cover the deficiency in his account. The general journal entry to record the final distribution would be:

Debit Cash $28,400; debit Huss, Capital $2,400; credit Mack, Capital $15,400; credit Harris, Capital $15,400.

Debit Mack, Capital $15,400; debit Harris, Capital $15,400; credit Cash $30,800.

Debit Mack, Capital $15,400; debit Harris, Capital $15,400; credit Huss, Capital $2,400; credit Cash $28,400.

Debit Mack, Capital $9,466; debit Harris, Capital $9,467; debit Huss, Capital $9,467; credit Cash $28,400.

Debit Mack, Capital $14,200; debit Harris, Capital $14,200; credit Cash $28,400.

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