1. If a company had net income of $1,546,875, a times interest earned ratio of 4, a tax rate of 40%, and operating income of $3,170,000, what is the company's interest expense for the year?

A) $1,109,500

B) $753,829

C) $386,719

D) $792,500

E) $1,624,000.

2. A company sells leaf blowers for $1,270 each. Each unit has a three-year warranty that covers replacement of defective parts. It is estimated that 4% of all leaf blowers sold will be returned under the warranty at an average cost of $52 each. During October, the company sold 411,000 leaf blowers; 910 leaf blowers were serviced under the warranty during October at a total cost of $36,000. The balance in the Estimated Warranty Liability account on October 1 was $18,000. What is the company's warranty expense for the month of October?

A) $36,000

B) $54,000

C) $836,880

D) $854,880

E) $47,320

3. An employee earned $45,200 during the year working for an employer. The FICA tax for social security is 6.2%, and the FICA tax for Medicare is 1.45%. The employee's share of FICA taxes is:

A) Zero, since the employee's pay exceeds the FICA limit.

B) $6,915.60.

C) $655.40.

D) $3,457.80.

E) $2,802.40.

4. Buyer Company asks to extend its past due $640 account payable to Seller Company. Seller Company agrees to accept $120 cash and a 90-day, 11%, $520 note payable to replace the account payable. How does Buyer Company record this event in the general journal?

A) Buyer Company has no entry to record for this transaction.

B)

Accounts payable	520
Cash		120
Notes payable		640

C)

Accounts payable	640
Cash		120
Notes payable		520

D)

Cash	120
Accounts payable		120

E)

Accounts payable	120
Cash		120

5.) Company A and Company B each borrow $2,400 from the bank. Company A signed a 30-day, 9% note. Company B signed a 60-day, 8% note. How will each of these companies record these events in their respective general journals on the day the money was borrowed?

A) Company A

Cash	2,400
Notes payable		2,400

Company B

Cash	2,400
Notes payable		2,400

B) Company A

Interest expense	18
Notes payable	2,400
Cash		2,418

Company B

Interest expense	18
Notes payable	2,400
Cash		2,418

C) Company A

Cash	2,418
Notes payable		2,418

Company B

Cash	2,432
Notes payable		2,432

D) Company A

Notes payable	2,400
Cash		2,400

Company B

Notes payable	2,400
Cash		2,400

E) Company A

Cash	2,418
Interest expense		18
Notes payable		2,400

Company B

Cash	2,432
Interest expense		32
Notes payable		2,400

6. On October 10, 2013, Printfast Company sells a commercial printer for $3,750 with a one-year warranty that covers parts. Warranty expense is projected to be 6% of sales. On February 28, 2014, the printer requires repairs. The cost of the parts for the repair is $190 and Printfast pays their technician $290 to perform the repair. What is the warranty liability for this printer at the at the end of 2014?

A) $35.

B) $196.

C) $225.

D) $0, there is no liability at the end of 2014.

E) $480.