Exam 15: Accounting Principles and Contingent Liabilities in Business Operations

Warranty expenses are reported on the income statement as

Transactions that cannot be entered in a special journal are recorded in the _______________, and if control and subsidiary accounts are involved, there must be a _______________ posting.

If a company purchases merchandise for cash, the transaction should be recorded in the

If the single amount of $3,000 is to be received in 3 years and discounted at 6%, its present value is

Payments or receipts of equal dollar amounts are referred to as __________________.

Entries in the cash payments journal are made from

Entries in a sales journal are

Sasser Company uses a sales journal, a cash receipts journal, and a general journal to record transactions with its customers. Record the following transactions in the appropriate journals. The cost of all merchandise sold was 70% of the sales price. July 2 Sold merchandise for $21,000 to B. Stine on account. Credit terms 2/10, n/30. Sales invoice No. 100. July 5 Received a check for $800 from R. Hyatt in payment of his account. July 8 Sold merchandise to F. Wendel for $900 cash. July 10 Received a check in payment of Sales invoice No. 100 from B. Stine minus the 2% discount. July 15 Sold merchandise for $9,000 to J. Nott on account. Credit terms 2/10, n/30. Sales invoice No. 101. July 18 Borrowed $25,000 cash from United Bank signing a 6-month, 10% note. July 20 Sold merchandise for $18,000 to C. Karn on account. Credit terms 2/10, n/30. Sales invoice No. 102. July 25 Issued a credit memorandum for $600 to C. Karn as an allowance for damaged merchandise previously sold on account. July 31 Received a check from J. Nott for $5,000 as payment on account.

Compute the future value of $6,000 invested every year at an interest rate of 9%. You invest the money for 20 years with the first payment made at the end of the year.

On December 1, the accounts receivable control account balance in the general ledger of Mitus Company was $9,000. The accounts receivable subsidiary ledger contained the following detailed customer balances: Acme $1,500, Baker $2,100, Fare $2,600, and Grote $2,800. The following information is available from the company's special journals for the month of December: Cash Receipts Journal: Cash received from Fare $1,900, from Acme $2,100, from Santos $1,700, and from Baker $1,800. Sales Journal: Sales to Santos $3,300, to Fare $1,700, to Acme $2,300, and to Grote $2,400. Additionally, Fare returned defective merchandise for credit for $900. Acme returned defective merchandise for $600 which he had purchased for cash. Instructions (a) Using T-accounts for Accounts Receivable Control and the detail customer accounts, post the activity for the month of December. (b) Reconcile the accounts receivable control account with the subsidiary ledger by preparing a detail list of customer balances at December 31.

A subsidiary ledger frees the general ledger from details of

Diane Lane earns a salary of $9,500 per month during the year. FICA taxes are 7.65% on the first $106,800 of gross earnings. Federal unemployment insurance taxes are 6.2% of the first $7,000; however, a credit is allowed equal to the state unemployment insurance taxes of 5.4% on the $7,000. During the year, $32,300 was withheld for federal income taxes and $6,700 was withheld for state income taxes. Instructions (a) Prepare a journal entry summarizing the payment of Lane's total salary during the year. (b) Prepare a journal entry summarizing the employer payroll tax expense on Lane's salary for the year. (c) Determine the cost of employing Lane for the year.

If the single amount of $4,000 to be received in 2 years is discounted at 11%, its present value is

Compound interest is the return on principal

Disclosure of a contingent liability is usually made

Banner Company had the following payroll data for the year: Assume the following: Instructions Compute Banner's payroll tax expense for the year. Make a summary journal entry to record the payroll tax expense.

Bill Cigarettes acquired a bad habit of smoking in high school. Bill spends approximately $70 a month or $840 a year on cigarettes. He is not concerned with health issues, but he is keenly aware of financial issues. Show Bill how much he would have at retirement in 20 years if he invested $840 a year at 8% instead of smoking.

Martin Company issued $900,000, 10-year bonds and agreed to make annual sinking fund deposits of $72,000. The deposits are made at the end of each year to a fund paying 5% interest compounded annually. What amount will be in the sinking fund at the end of the 10 years?

Cecilia Jeffries purchased an investment for $49,090.75. From this investment, she will receive $5,000 annually for the next 20 years starting one year from now. What rate of interest will Cecilia be earning on her investment?

Robin Clark has a cell phone that she uses only for emergencies. The cost of the phone is $40 a month. The cellular company is offering unlimited nights and weekends for an additional $10 a month ($120 a year). Robin thinks it would be "cool" to have this benefit and, after all, $10 a month is not much. Show Robin how much she will have in 20 years if she invests this $120 a year at 9% instead of accepting the unlimited nights and weekends offer.