Question

1) Sales revenue for a sporting goods store amounted to $215,000 for the current period.  All sales are on account and are subject to a sales tax of 7%.  Which of the following would be included in the journal entry to record these sales?

A) A debit to Sales revenue for $215,000

B) A credit to Accounts receivable for $215,000

C) A debit to Sales tax payable for $15,050

D) A debit to Accounts receivable for $230,050

2) A $20,000, 3-month, 8% note payable was issued on November 1, 2015.  What is the amount of accrued interest on December 31, 2015?

A) $200

B) $267

C) $133

D) $800

3) A $20,000, 3-month, 8% note payable was issued on November 1, 2015.  Which of the following would be included in the journal entry required on the note's maturity date?

A) A credit to Note payable for $20,400

B) A credit to Cash for $10,000

C) A debit to Interest expense for $133

D) A debit to Interest payable for $133

4) Joe signs a $5,000, 8%, 6-month note dated September 1, 2012.  What is Joe's 2013 interest expense for this note?

A) $133

B) $200

C) $400

D) $67

5) Archie's had sales of $6,758.  The state sales tax rate is 7%.  All sales are cash.  What amount will be debited to Cash?

A) $6,758.00

B) $7,231.06

C) $473.06

D) $866.06

6) A company has been sued for product failures allegedly resulting in injuries to the individuals bringing the lawsuit.  The company's lawyers believe it is more than remote, but less than probable, that the lawsuit will result in an actual liability.  Which of the following actions should be taken by the company's management?

A) The liability should be estimated and recorded as an expense.

B) The situation should be described in a note to the financial statements.

C) The possible liability should be ignored.

D) Management should consider resigning.

7) Ace Appliances sells dishwashers with a 3-year warranty.  In 2013, there are $90,000 of sales revenues for dishwashers.  The company estimates warranty expense at 3% of revenues.  What is the total estimated warranty payable for Ace regarding the sales in 2013?

A) $2,700

B) $600

C) $1,400

D) $3,000

8) Sue works 46 hours at her job during the week.  She is paid $13.30/hour and receives overtime at the rate of time-and-one-half for hours worked over forty.  What is Sue's gross pay for the week?

A) $611.80

B) $917.70

C) $651.70

9) Which of the following deductions must be matched by the employer, resulting in both a deduction from gross pay and an expense to the employer?

A) Federal income taxes

B) Federal unemployment taxes

C) FICA taxes

D) Charitable deductions

10 ) Tom's gross pay for the week is $800.  Tom's deduction for federal income tax is based on a rate of 18%.  Tom has no voluntary deductions.  Tom's yearly pay is under the limit for OASDI.  What is the amount of Tom's net pay?

A) $594.80

B) $738.80

C) $656.00

D) $533.60

Answer 1

1)	D) A debit to Accounts receivable for $230,050
Sales	(a)		2,15,000.00
Sales Tax	(b=a*7%)		15,050.00
Total accounts receivable	(c=a+b)		2,30,050.00
To record entry for above transaction,
Accounts receivable is debited with $ 230,050, Sales revenue is credited with $215,000 and sales tax payable is credited with $ 15,050.
So,
A) A debit to Sales revenue for $215,000
Sales revenue is credited, not debited.
B) A credit to Accounts receivable for $215,000
Accounts receivable is debited, not credited.
C) A debit to Sales tax payable for $15,050
Sales tax payable is credited,not debited.
2)	B) $267
Working:
Interest for 2 months ending on December 31, 2015	=	20000*8%*2/12
	=	267
3)	C) A debit to Interest expense for $133
Working:
Interest for 1 month ending on maturity date	=	20000*8%*1/12
	=	133
To record entry for above transaction,
Interest payable will be debited with 267, interest expense will be debited with 133 and total liability (Notes + Interest) of 20,400 will be paid in cash on the maturity date.
4)		D) $ 67
Working:
Interest period of :
2012		September to December (4 months)
2013		January to February (2 months)
Interest for 2 months of 2013	=	5000*8%*2/12
	=	67
5)	B) $ 7,231.06
Sales	(a)		6,758.00
Sales Tax	(b=a*7%)		473.06
Total accounts receivable	(c=a+b)		7,231.06