Got some practice questions before finals

Which of the following items does not qualify as a contingent liability?

Loaning money to another party who may not be able to repay

Unresolved environmental damage claims brought by the government

None of these

Being named as a defendant in a lawsuit

On July 1, 20X1, a company borrows $100,000 on a 5% note, due in one year. Assume accrued interest was recorded on December 31. What accounts would be impacted at the time of repayment of the note and interest on June 30 20X2?

Interest expense by 5,000

Interest payable, by 2,500

Notes payable by 105,000

Cash by 100,000

The beginning warranty liability was $25,000. Sales of $5,000000 were made, and 2% of sales is the estimated warranty cost. The ending balance of warranty liability was $35,000(credit). How much warrant work was performed?

110,000

10,000

90,000

100,000

None

Leonard recorded gross pay of $250,000. This is subject to employees portion of social security and Medicare taxes of $16,750. Unemployment taxes of $3,000, and federal tax withholding of $46,000. How much is payroll tax expense?

16,750

19,750

36,500

0

Leonard recorded gross pay of $250,000. This is subject to employees portion of social security and Medicare taxes of $16,750. Unemployment taxes of $3,000, and federal tax withholding of $46,000. How much is salaries payable?

None

266,750

315,750

250,000

253,000

Sylvan company had sales of $1,500,000. Estimated warranty costs are 1% of sales. Work performed under warranties during the period actually cost $8,750. The entry to record the warranty liability includes:

A debit to warranty expense for $15,000

A debit to warranty expense for 6,250

A debit to warranty expense

A debit to warranty expense

None of these

Walban department store records all sales at amounts the includes 8% sales tax. During November total recorded sales were $706,320. What portion of these sales should be recorded as a tax liability?

None of these

0

56,505.60

52,320

654,000

Federal income taxes should not be withheld from

Overtime wages

Wages in excess of the social security base

A retiring employees last paycheck

Amounts paid to independent contractors

none

Leonard recorded gross pay of $250,000. This is subject to employees portion of social security and Medicare taxes of $16,750. Unemployment taxes of $3,000, and federal tax withholding of $46,000. How much is the employers total liability for this payroll?

269,750

223,750

266,750

250,000

On April 1, 20X6, Owen issued $100,000 of 12%, 10-year bonds. The bonds were issued at par + accrued interest, are dated January 1, 20X6, and pay interest on July and January 1. The entry to record the issuance of the bonds will include:

A debit to cash of 103,000

A credit to bonds payable of 103,000

A credit to interest income of 3,000

None of these

A credit to cash of 100,000

Ace retired a $10,000 bond by paying $11,000 cash. The payment included accrued interest of $250. At the date of retirement, the unamortized discount on the bonds was $400. How much is the loss on retirement?

None of these

0

350

1,150

750

On June 1, Sao corporation issued $300,000 of 9%, 5-year bonds. The bonds were issued at 97, pay interest on January 1 and June1. The entry to record issuance of the bonds includes:

A credit to bonds payable of $291,000

A credit to cash of 300,000

A debit to discount on notes payable of 9,000

A credit to interest payable of 9,000

On January 1, 20X1, Perkins issued $100,000 face, 8%, 5-year bonds at $92,278. The bonds pay interest annually and were priced to yield 10%. Using the effective interest method, how much is interest expense for 20X1?

8,000

9,227.80

9,544.40

9,258.50

None of the above

Which of the following statements about bonds is true?

Once outstanding, bonds may not be bought or sold

Bonds must be issued at face value

Interest is not accrued on bonds outstanding at year end

All bonds have a face value

None of these

Hutton Corporation issued $100,000 of 7%, 15-year bonds on June 1, 20X6(dated April 1 20X6) at 101 plus accrued interest, which is is paid on April 1 and October 1. The proper entry to record issuance of the bonds includes a debit to cash for:

102,167

101,000

101,167

100,000

None of the above

Gaines originally issued 15,000 shares of $10 par value common stock at $15 per share. During the current year, 1000 of these shares were reacquired for $20 each. The proper entry to record the re-acquisition includes:

A debit to retained earnings for 5,000

A debit to treasury stock for 15,000

A debit to treasury stock for 10,000

A debit to treasury stock for 20,000

None of the above