Merger Co. has 10 employees, each of whom earns $2,000 per month and has been employed since January 1. FICA Social Security taxes are 6.2% of the first $117,000 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000 paid to each employee. Prepare the March 31 journal entry to record the March payroll taxes expenses. (Round amounts to cents.)
> What purpose is served by the output devices of an accounting system?
> What is the difference between data that are stored off-line and data that are stored online?
> What is the purpose of an input device? Give examples of input devices for computer systems.
> What are source documents? Give two examples.
> Locate “Note 15” that reports Google’s geographical segments from its 2013 annual report on its website (Google.com). Identify its geographical segments and list the revenues for each.
> Why should sales to and receipts of cash from credit customers be recorded and posted immediately?
> Describe the procedures involving the use of copies of a company’s sales invoices as a sales journal.
> What are five basic components of an accounting system?
> When preparing interim financial statements, what two methods can companies utilize to estimate cost of goods sold and ending inventory?
> Samsung’s balance sheet in Appendix A reports the change in cash and equivalents for the year ended December 31, 2013. Identify the cash generated (or used) by operating activities, by investing activities, and by financing (funding) ac
> What factors contribute to (or cause) inventory shrinkage?
> Buyers negotiate purchase contracts with suppliers. What type of shipping terms should a buyer attempt to negotiate to minimize freight-in costs?
> Refer to the income statement of Samsung in Appendix A. Does its income statement report a gross profit figure? If yes, what is the amount? Income Statement of Samsung from Appendix A: Samsung Electronics Co, Ltd. and its subsidiaries CONSOLIDATED
> Refer to the income statement for Samsung in Appendix A. What does Samsung title its cost of goods sold account? Income Statement of Samsung from Appendix A: Samsung Electronics Co, Ltd. and its subsidiaries CONSOLIDATED STATEMENTS OF INCOME (In mi
> Refer to Google’s income statement in Appendix A. What title does it use for cost of goods sold? Google’s Income Statement from Appendix A: CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share amounts
> What guidance does the accounting constraint of conservatism offer?
> What is the meaning of market as it is used in determining the lower of cost or market for inventory?
> Explain the following statement: “Inventory errors correct themselves.”
> What notations are entered into the Posting Reference column of a ledger account?
> Does the accounting concept of consistency preclude any changes from one accounting method to another?
> Locate “Note 11” that reports Apple’s segments from its September 28, 2013, annual report on its website (Apple.com). Compute the ratio “Operating income/Net sales” for each segment. Comment on the results.
> Can a company change its inventory method each accounting period? Explain.
> What does the full-disclosure principle prescribe if a company changes from one acceptable accounting method to another?
> If costs are declining, will the LIFO or FIFO method of inventory valuation yield the lower cost of goods sold? Why?
> What are the five fundamental principles of accounting information systems?
> Where is the amount of merchandise inventory disclosed in the financial statements?
> Describe how costs flow from inventory to cost of goods sold for the following methods: (a) FIFO and (b) LIFO.
> Management uses a voucher system to help control and monitor cash disbursements. Which of the four documents listed below are prepared as part of a voucher system of control? ______ a. Purchase order ______ b. Outstanding check ______ c. Invoice _____
> A good system of internal control for cash provides adequate procedures for protecting both cash receipts and cash disbursements. Identify each of the following statements as either true or false regarding this protection. ______ a. A basic guideline for
> Choose from the following list of terms/phrases to best complete the following statements. a. Cash b. Cash equivalents c. Outstanding check d. Liquidity e. Bank reconciliation f. Current assets 1. The ______ category includes currency and coins along
> An internal control system consists of all policies and procedures used to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies. Evaluate each of the following statements and indicate which are
> Refer to Google’s financial statements in Appendix A. Identify Google’s net earnings (income) for the year ended December 31, 2013. Is its net earnings equal to the increase in cash and cash equivalents for the year? E
> Enter the letter of each system principle in the blank next to its best description. A. Control principle B. Relevance principle C. Compatibility principle D. Flexibility principle E. Cost-benefit principle ______ 1. The principle prescribes the accoun
> Identify the most likely role in an accounting system played by each of the numbered items 1 through 12 by assigning a letter from the list A through E on the left. A. Source documents B. Input devices C. Information processors D. Information storage E.
> Wilcox Electronics uses a sales journal, a purchases journal, a cash receipts journal, a cash disbursements journal, and a general journal as illustrated in this chapter. Wilcox recently completed the following transactions a through h. Identify the jour
> A solar company invests in the following securities. Identify those investments as either an investment in debt (D) securities or equity (E) securities. ______ a. U.S. treasury bonds ______ b. Google stock ______ c. Certificate of deposit ______ d. Ap
> Complete the following descriptions by filling in the blanks. 1. The controlling investor is called the ______, and the investee is called the ______. 2. A long-term investment classified as equity securities with controlling influence implies that the i
> Which of the following statements a through g are true of long-term investments? ______ a. They are held as an investment of cash available for current operations. ______ b. They can include funds earmarked for a special purpose, such as bond sinking fun
> 1. Prepare the journal entry to record Tamasine Company’s issuance of 5,000 shares of $100 par value, 7% cumulative preferred stock for $102 cash per share. 2. Assuming the facts in part 1, if Tamasine declares a year-end cash dividend, what is the amoun
> The stockholders’ equity section of Jun Company’s balance sheet as of April 1 follows. On April 2, Jun declares and distributes a 10% stock dividend. The stock’s per share market value on April 2 is $
> Prepare the issuer’s journal entry for each of the following separate transactions. a. On March 1, Atlantic Co. issues 42,500 shares of $4 par value common stock for $297,500 cash. b. On April 1, OP Co. issues no-par value common stock for $70,000 cash.
> Prepare the journal entry to record Jevonte Company’s issuance of 36,000 shares of its common stock assuming the shares have a: a. $2 par value and sell for $18 cash per share. b. $2 stated value and sell for $18 cash per share.
> Locate “Note 11” that reports Apple’s segments from its September 28, 2013, annual report on its website (Apple.com). Identify its segments and list the net sales for each.
> Foxburo Company expects to pay a $2.34 per share cash dividend this year on its common stock. The current market value of Foxburo stock is $32.50 per share. Compute the expected dividend yield on the Foxburo stock. Would you classify the Foxburo stock as
> Answer the following questions related to a company’s activities for the current year: 1. A review of the notes payable files discovers that three years ago the company reported the entire amount of a payment (principal and interest) on an installment no
> On May 3, Zirbal Corporation purchased 4,000 shares of its own stock for $36,000 cash. On November 4, Zirbal reissued 850 shares of this treasury stock for $8,500. Prepare the May 3 and November 4 journal entries to record Zirbal’s purchase and reissuanc
> Howe and Duley’s company is organized as a partnership. At the prior year-end, partnership equity totaled $150,000 ($100,000 from Howe and $50,000 from Duley). For the current year, partnership net income is $24,990 ($20,040 allocated to Howe and $4,950
> The Field, Brown & Snow partnership was begun with investments by the partners as follows: Field, $131,250; Brown, $165,000; and Snow, $153,750. The operations did not go well, and the partners eventually decided to liquidate the partnership, sharing all
> Amy and Lester are partners in operating a store. Without consulting Amy, Lester enters into a contract to purchase merchandise for the store. Amy contends that she did not authorize the order and refuses to pay for it. The vendor sues the partners for t
> On November 7, 2015, Mura Company borrows $160,000 cash by signing a 90-day, 8% note payable with a face value of $160,000. (1) Compute the accrued interest payable on December 31, 2015, (2) prepare the journal entry to record the accrued interest expe
> Dextra Computing sells merchandise for $6,000 cash on September 30 (cost of merchandise is $3,900). The sales tax law requires Dextra to collect 5% sales tax on every dollar of merchandise sold. Record the entry for the $6,000 sale and its applicable sal
> Garcia Co. owns equipment that cost $76,800, with accumulated depreciation of $40,800. Garcia sells the equipment for cash. Record the sale of the equipment assuming Garcia sells the equipment for (1) $47,000 cash, (2) $36,000 cash, and (3) $31,000 ca
> Refer to Samsung’s balance sheet in Appendix A. How does its cash (titled “Cash and cash equivalents”) compare with its other current assets (both in amount and percent) as of December 31, 2013? Compare and assess its cash at December 31, 2013, with its
> 1. Classify the following as either a revenue expenditure or a capital expenditure. ______ a. Paid $40,000 cash to replace a compressor on a refrigeration system that extends its useful life by four years. ______ b. Paid $200 cash per truck for the cost
> A fleet of refrigerated delivery trucks is acquired on January 5, 2015, at a cost of $830,000 with an estimated useful life of eight years and an estimated salvage value of $75,000. Compute the depreciation expense for the first three years using the dou
> Answer each of the following related to international accounting standards. a. Accounting for plant assets involves cost determination, depreciation, additional expenditures, and disposals. Is plant asset accounting broadly similar or dissimilar between
> Caleb Co. owns a machine that costs $42,400 with accumulated depreciation of $18,400. Caleb exchanges the machine for a newer model that has a market value of $52,000. (1) Record the exchange assuming Caleb paid $30,000 cash and the exchange has commerc
> On August 2, 2015, Jun Co. receives a $6,000, 90-day, 12% note from customer Ryan Albany as payment on his $6,000 account. (1) Compute the maturity date for this note. (2) Prepare Jun’s journal entry for August 2.
> Warner Company’s year-end unadjusted trial balance shows accounts receivable of $99,000, allowance for doubtful accounts of $600 (credit), and sales of $280,000. Uncollectibles are estimated to be 1.5% of accounts receivable. 1. Prepare the December 31 y
> Gomez Corp. uses the allowance method to account for uncollectibles. On January 31, it wrote off an $800 account of a customer, C. Green. On March 9, it receives a $300 payment from Green. 1. Prepare the journal entry or entries for January 31. 2. Prepar
> Answer each of the following related to international accounting standards. a. Explain (in general terms) how the accounting for recognition of receivables is different between IFRS and U.S. GAAP. b. Explain (in general terms) how the accounting for valu
> The following data are taken from the comparative balance sheets of Ruggers Company. Compute and interpret its accounts receivable turnover for year 2015 (competitors average a turnover of 7.5). 2015 2014 Accounts receivable, net. $153,400 $138,500
> The following annual account balances are taken from Armour Sports at December 31. What is the change in the number of days’ sales uncollected between years 2014 and 2015? (Round the number of days to one decimal.) According to this a
> Credits to customer accounts and credits to Other Accounts are individually posted from a cash receipts journal such as the one in Exhibit 7.7. Why not put both types of credits in the same column and save journal space? Exhibit 7.7: Tasks Reports
> An entrepreneur commented that a bank reconciliation may not be necessary as she regularly reviews her online bank statement for any unusual items and errors. a. Describe how a bank reconciliation and an online review (or reading) of the bank statement a
> For each of the following items a through g, indicate whether its amount (1) affects the bank or book side of a bank reconciliation, (2) represents an addition or a subtraction in a bank reconciliation, and (3) requires an adjusting journal entry.
> 1. The petty cash fund of the Brooks Agency is established at $150. At the end of the current period, the fund contained $28 and had the following receipts: film rentals, $24; refreshments for meetings, $46 (both expenditures to be classified as Entertai
> Answer each of the following related to international accounting standards. a. Explain how the purposes and principles of internal controls are different between accounting systems reporting under IFRS versus U.S. GAAP. b. Cash presents special internal
> An important part of cash management is knowing when, and if, to take purchase discounts. a. Which accounting method uses a Discounts Lost account? b. What is the advantage of this method for management?
> Answer each of the following questions related to international accounting standards. a. Explain how the accounting for items and costs making up merchandise inventory is different between IFRS and U.S. GAAP. b. Can companies reporting under IFRS apply a
> Apple reports the following net sales by product segments. Compute the percentage of total sales for each of its six product segments. Comment on the relative contributions of each product segment. $ millions iPhone iPad Mac iPod iTunes Accessories
> Warton Company posts its sales invoices directly and then binds them into a sales journal. The company had the following credit sales to these customers during July. Required 1. Open an accounts receivable subsidiary ledger having a T-account for each
> In taking a physical inventory at the end of year 2015, Grant Company forgot to count certain units. Explain how this error affects the following: (a) 2015 cost of goods sold, (b) 2015 gross profit, (c) 2015 net income, (d) 2016 net income, (e) the c
> Following is information from Fredrickson Company for its initial month of business. (1) Identify the balances listed in the accounts receivable subsidiary ledger. (2) Identify the accounts receivable balance listed in the general ledger at monthâ
> Refer to the December 31, 2013, financial statements of Samsung in Appendix A. Does Samsung report its accounts receivable as a current or noncurrent asset? Does Samsung report its GOOGLE accounts receivable net of an allowance? Samsungâ€
> How do sellers benefit from allowing their customers to use credit cards?
> Suppose the price of an MP3 player decreases from $60 to $40. Using the midpoint approach, the percentage change in price is _________. Using the initial-value approach, the percentage change in price is _________.
> Compute the new values for the following changes: Initial Value Percentage Change New Value 100 12% 50 8 20 15
> Compute the percentage changes for the following: Initial Value New Value Percentage Change 10 12 100 92 40 45
> Suppose you have $120 to spend on CDs and movies. The price of a CD is $12, and the price of a movie is $6. a. Using Figure 1A.6 on page 51 as a model, prepare a table and draw a curve to show the relationship between the number of CDs (on the horizontal
> The following graph shows the relationship between the number of Frisbees produced and the cost of production. The vertical intercept is $_________, and the slope of the curve is $_________ per Frisbee. Point b shows that the cost of producing _________
> Suppose you belong to a tennis club that has a monthly fee of $100 and a charge of $5 per hour to play tennis. a. Using Figure 1A.4 as a model, prepare a table and draw a curve to show the relationship between the hours of tennis (on the horizontal axis)
> 5.1. Your savings account pays 4 percent per year: Each $100 in the bank grows to $104 over a 1 year period. If prices increase by 3 percent per year, by keeping $100 in the bank for a year you actually gain $__________. 5.2. You earn 4 percent interest
> 3.1. When two people involved in an exchange say “thank you” afterward, they are merely being polite. __________ (True/False) 3.2. Consider a transaction in which a consumer buys a toy for $20. The value of the toy to the buyer is at least $__________, a
> 1.1. Consider Figure 2.1. Between points c and d, the opportunity cost of __________ tons of wheat is __________ tons of steel. Figure 2.1: 1.2. Arrow up or down: An increase in the wage for high school graduates __________ the opportunity cost of col
> 4.1. Consider the example of Xena’s copy shop. Adding a second worker increased output by 300 pages. If she added a third worker, her output would increase by fewer than __________ pages. 4.2. If a firm is subject to diminishing margina
> 2.1. A car rental company currently has seven cars in its fleet, and its total daily cost is $2,300. If the company added an 8th car, its daily cost would be $2,400, or $300 per car. Adding the 8th car will increase the daily total revenue by $200. Shoul
> You manage Gofer Delivery Service. You rent a truck for $50 per day, and each delivery takes an hour of labor time. The hourly wage is $8. a. Draw a curve showing the relationship between the number of deliveries (on the horizontal axis) and your total c
> A change in a variable measured on an axis of a graph causes movement _________ a curve, while a change in a relevant variable that is not measured on an axis _________ the entire curve.
> 1. The three basic economic questions a society must answer are _________ products do we produce? _________ do we produce the products? _________ consumes the products? 2. List the five factors of production. 3. Which of the following statements is true?
> 3.1. In 2015, less than 20 percent of the unemployed in the United States were unemployed for a period shorter than 5 weeks. _________ (True/False) 3.2. As most states in the United States replace the entire wages of individuals on unemployment insuranc
> 6.1. Inflation that is not expected is known as _________ inflation. 6.2. Shoe-leather costs typically increase with the rate of inflation. _________ (True/False) 6.3. Creditors lose from unanticipated inflation. _________ (True/False) 6.4. Hyperinflat
> 4.1. The value of a price index in the base year is equal to _________. 4.2. Economists believe that the CPI tends to overestimate the increase in the cost of living over time. _________. (True/False) 4.3. Unlike the CPI, the chain-weighted price index
> 5.1. If a price index is 40 in 1997 and 50 in 1998, the rate of inflation between the two years is _________. 5.2. Inflation in the United States was higher from 1990 to 2009 than it was from 1970 to 1980. _________ (True/ False) 5.3. Which of the foll
> 1.1. Which of the following is not included in the labor force? a. People who have full-time, but poorly paid jobs. b. Individuals who have sizable inheritances and do not want any jobs. c. People who work 15 hours a week. d. 17-year-olds who do not have
> 2.1. The three key types of unemployment are cyclical, structural, and _________. 2.2 The natural rate of unemployment consists solely of _________ and _________ unemployment. 2.3. When the economy is at full employment, there is no cyclical unemployme
> 2.1. When calculating GDP using the production method, which of the following would you not include? a. Consumption b. Investment c. Value added d. Government purchases e. Net exports 2.2. What part of government spending is excluded from GDP because it
> 3.1. What do we add to GDP to reach GNP? a. Net income earned abroad by U.S. households b. Personal income c. Depreciation d. Net exports 3.2. If no foreign companies produce in a country, but many of the country’s companies produce abroad, then it
> 1.1. The circular flow describes the process by which GDP generates __________, which is spent on goods and services. 1.2. Macroeconomics is the study of the __________ (national/international) economy taken as a whole. 1.3. Which government department p
> 6.1. Which of the following are not included in GDP? a. A mother taking care of children at home b. Professors teaching at a university c. Strawberries sold in a grocery store d. Economics textbooks sold in a bookstore 6.2. Men’s reported happiness has i
