Question

On January 1, 2016, Horton Inc. sells a machine for $23,200. The machine was originally purchased on January 1, 2014 for $40,200. The machine was estimated to have a useful life of 5 years and a residual value of $0. Horton uses straight-line depreciation. In recording this transaction:

a loss of $920 would be recorded.

a loss of $17,000 would be recorded.

a gain of $23,200 would be recorded.

a gain of $920 would be recorded.

Bobby Darling is the only employee of Atlantic Records, Inc. During the first week of January, Darling earned $3,000.00 and had federal and state income tax withholdings of $150.00 and $56.25, respectively. FICA taxes are 7.65 % on earnings up to $117,000. State and federal unemployment taxes for the period are $187.50 and $30.00, respectively.

What would be the amount of Darling’s payroll check for the first week of January?

$2,770.50

$3,000.00

$2,564.25

$2,346.75

On October 1, 2015, Attra Inc. borrows $200,000 on a three-year note that requires the company to pay 6% interest on March 31 and September 30. On December 31, 2015, the adjusting entry to accrue interest on the note should debit:

Interest Expense and credit Interest Payable for $3,000.

Interest Expense and credit Interest Payable for $6,000.

Interest Expense and credit Cash for $6,000.

Interest Payable and credit Interest Expense for $3,000.

Zorn Inc. makes a sale for $480. The company is required to collect sales taxes amounting to 5%. What is the amount that will be credited to the Sales Tax Payable account?

$24

$23

$240

$25

Your company sells $42,000 of one-year, 15% bonds for an issue price of $40,000. The journal entry to record this transaction will include a credit to Bonds Payable in the amount of:

rev: 06_25_2016_QC_CS-54689

$40,000.

$42,000.

$46,300.

$48,300.

Answer 1

1.) So, Straight Line Depreciation per Year =

===> = (40,200 - 0) / 5 = $8,040

===> Depreciation for two years = $ 16,080

===> And Written Down Value = 40,200 - 16,080 = $24,120

===> Loss = WDV - Sale Proceeds = 24,120 - 23,200 = $920

2.) So The salary is $3000

Less:

Federal and State Income Taxes = $206.25

Federal and State Unemployment Taxes = $217.50

FICA @ 7.65% of Salary = $229.50

Net Paycheck = $2,346.75

3.) Interest per annum = 6% * 2 = 12%

Time elapsed from taking loan (1-Oct-2015) till year end (31-Dec-2015) = 3 months

Interest Accrued = 3/12 * $200,000 * 12% = $6,000

So, you should using the accrual concept of accounting, journal entry should be passed

Interest Expense A/c Dr $6,000

To Interest Payable A/c $6,000

So, Interest Expense goes to income statement and Interest Payable goes to liabilities side on balance sheet.

4.) Assuming, from "Sale is made", $480 is the price of the product exclusive of sales tax.

Sales Tax = 5% * 480 = $24

[However, the final collection from customer is $480, then the sales tax from reverse calculation of {(480/1.05) * 0.05} is $22.85]

5.)

Bank A/c Dr $40,000

Discount on Bond Issue Dr $2,000

To 15% Bonds Payable A/c $42,000

So, $42,000