1- After preparing and posting the closing entries for revenues and expenses, th
ID: 2489437 • Letter: 1
Question
1-
After preparing and posting the closing entries for revenues and expenses, the income summary account has a debit balance of $32,000. The entry to close the income summary account will be:
Debit Dividends $32,000; credit Income Summary $32,000.
Debit Income Summary $32,000; credit Dividends $32,000.
Debit Income Summary $32,000; credity Retained Earnings $32,000.
Debit Retained Earnings $32,000; credit Income Summary $32,000.
Credit Retained Earnings $32,000; debit Dividends $32,000.
2-
On December 1, Victoria Company signed a 90-day, 4% note payable, with a face value of $15,000. What amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)
$0
$50
$600
$150
$100
3-
Employees earn vacation pay at the rate of one day per month. During the month of July, 32 employees qualify for one vacation day each. Their average daily wage is $107 per day. What is the amount of vacation benefit expense to be recorded for the month of July?
$342.4
$34,240.0
$32.0
$107.0
$3,424.0
4-
An employee earned $45,000 during the year working for an employer when the maximum limit for Social Security was $117,000. The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The employee's annual FICA taxes amount is:
$3,442.50.
$2,790.00.
$6,885.00.
$6,885.00.
$652.50.
5-
An employee earned $3,900 working for an employer in the current year. The current rate for FICA Social Security is 6.2% payable on earnings up to $117,000 maximum per year and the rate for FICA Medicare 1.45%. The employer's total FICA payroll tax for this employee is:
$241.80.
$56.55.
$298.35.
Zero, since the FICA tax is a deduction from an employee's pay, and not an employer tax.
$596.70.
6-
A company's had fixed interest expense of $9,000, its income before interest expense and income taxes is $20,000, and its net income is $10,400. The company's times interest earned ratio equals:
1.16.
1.92.
0.45.
2.22.
0.87.
7-
A company issued 9%, 15-year bonds with a par value of $620,000 that pay interest semi-annually. The current market rate is 9%. The journal entry to record each semiannual interest payment is:
Debit Bond Interest Expense $27,900; credit Cash $27,900.
Debit Bond Interest Expense $55,800; credit Cash $55,800.
Debit Bond Interest Expense $41,333; credit Cash $41,333.
Debit Bond Interest Expense $570,000; credit Cash $570,000.
No entry is needed, since no interest is paid until the bond is due.
8-
On July 1, Shady Creek Resort borrowed $500,000 cash by signing a 34-year, 20.5% installment note requiring equal payments each June 30 of $121,292. What amount of interest expense will be included in the first annual payment?
$102,500
$18,792
$14,706
$121,292
$481,208
9-
A company purchased equipment and signed a 9-year installment loan at 7% annual interest. The annual payments equal $5,600. The present value of an annuity factor for 9 years at 7% is 6.5150. The present value of the loan is:
$50,400.
$6,515.
$36,484.
$43,000.
$5,600.
10-
A company must repay the bank a single payment of $18,000 cash in 3 years for a loan it entered into. The loan is at 10% interest compounded annually. The present value factor for 3 years at 10% is 0.7513. The present value of the loan (rounded) is:
$13,523.
$16,200.
$23,400.
$12,600.
$18,000.
11-
Adonis Corporation issued 10-year, 7% bonds with a par value of $250,000. Interest is paid semiannually. The market rate on the issue date was 6%. Adonis received $268,603 in cash proceeds. Which of the following statements is true?
Adidas must pay $250,000 at maturity plus 20 interest payments of $8,750 each.
Adidas must pay $268,603 at maturity plus 20 interest payments of $8,750 each.
Adidas must pay $268,603 at maturity and no interest payments.
Adidas must pay $250,000 at maturity and no interest payments.
Adidas must pay $250,000 at maturity plus 20 interest payments of $7,500 each.
After preparing and posting the closing entries for revenues and expenses, the income summary account has a debit balance of $32,000. The entry to close the income summary account will be:
Explanation / Answer
1- After preparing and posting the closing entries for revenues and expenses, th
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