Q&A Hero

Q: A company is creating a fund by depositing $65,763 today. The fund will grow to $90,000 after eight years. What annual interest rate is the company earning on the fund?

Q: Thompson Company has acquired a machine from a dealer which requires a payment of $45,000 at the end of five years. This transaction includes interest at 8%, compounded semiannually. What is the value of the machine today?

Q: Annette has a loan that requires a $25,000 payment at the end of three years. The interest rate on the loan is 5%, compounded annually. How much did Annette borrow today?

Q: A company needs to have $200,000 in four years, and will create a fund to ensure that the $200,000 will be available. If they can earn a 7% return, how much must the company invest in the fund today to equal the $200,000 at the end of four years?

Q: What is interest?

Q: Chad is setting up a retirement fund, and he plans on depositing $5,000 per year in an investment that will pay 7% annual interest. How long will it take him to reach his retirement goal of $69,080? A. 13.816 years B. 0.072 years C. 10 years D. 20 years E. 5 years

Q: An individual is planning to set-up an education fund for her children. She plans to invest $10,000 annually at the end of each year. She expects to withdraw money from the fund at the end of 10 years and expects to earn an annual return of 8%. What will be the total value of the fund at the end of 10 years? A. $ 46,320 B. $ 67,107 C. $100,000 D. $144,870 E. $215,890

Q: What amount can you borrow if you make six quarterly payments of $4,000 at a 12 % annual rate of interest? A. $24,838.00 B. $21,668.80 C. $31,049.00 D. $40,000.00 E. $44,800,00

Q: A company is considering an investment that will return $20,000 at the end of each semiannual period for four years. If the company requires an annual return of 10%, what is the maximum amount it is willing to pay for this investment? A. Not more than $63,398 B. Not more than $126,796 C. Not more than $80,000 D. Not more than $129,264 E. Not more than $160,000

Q: Jon Shear expects an investment of $25,000 to return $6,595 annually. His investment is earning 10% per year. How many annual payments will he receive? A. Five payments B. Six payments C. Four payments D. Three payments E. More than six payments

Q: Crowe Company has acquired a building with a loan that requires payments of $20,000 every six months for five years. The annual interest rate on the loan is 12%. What is the present value of the building? A. $72,096 B. $113,004 C. $147,202 D. $86,590 E. $200,000

Q: What interest rate is required to accumulate $6,802.50 in four years from an investment of $5,000? A. 5% B. 8% C. 10% D. 12% E. 15%

Q: How long will it take an investment of $25,000 at 6% compounded annually to accumulate to a total of $35,462.50? A) 4 years B) 5 years C) 6 years D) 2 years E) 10 years

Q: Keisha has $3,500 now and plans on investing it in a fund that will pay her 12% interest compounded quarterly. How much will Keisha have accumulated after two years? A. $4,433.80 B. $4,340.00 C. $4,390.40 D. $3,920.00 E. $3,500.00

Q: A company expects to invest $5,000 today at 12% annual interest and plans to receive $15,529 at the end of the investment period. How many years will elapse before the company accumulates the $15,529? A. 0.322 years B. 3.1058 years C. 5 years D. 8 years E. 10 years

Q: Sam has a loan that requires a single payment of $4,000 at the end of three years. The loan's interest rate is 6%, compounded semiannually. How much did Sam borrow? A. $3,358.40 B. $4,000.00 C. $3,660.40 D. $4,776.40 E. $3,350.00

Q: A company is considering investing in a project that is expected to return $350,000 four years from now. How much is the company willing to pay for this investment if the company requires a 12% return? A. $ 55,606 B. $137,681 C. $222,425 D. $265,764 E. $350,000

Q: Which interest rate column would you use to determine the factor from a present value table or a future value table for 8% compounded quarterly? A. 12% B. 6% C. 3% D. 2% E. 1%

Q: Interest is: A. Time. B. A borrower's payment to the owner of an asset for its use. C. The same as a savings account. D. Always a liability. E. Always an asset.

Q: The future value of an ordinary annuity is the accumulated value of each annuity payment with interest one period after the date of the final payment.

Q: With deposits of $5,000 at the end of each year, you will have accumulated $38,578 at the end of the sixth year if the annual rate of interest is 10%.

Q: The present value of $5,000 per year for three years at 12% compounded annually is $12,009.

Q: An ordinary annuity refers to a series of equal payments made or received at the end of equal intervals.

Q: An annuity is a series of equal payments occurring at equal intervals.

Q: At an annual interest rate of 8% compounded annually, $5,300 will accumulate to a total of $7,210.65 in five years.

Q: The future value of $100 compounded semiannually for three years at 12% equals $140.49.

Q: The number of periods in a future value calculation can only be expressed in years.

Q: Future value can be found if the interest rate (i), the number of periods (n), and the present value (p) are known.

Q: Sandra has a savings account that is now $50,000. She started with $28,225 and earned interest at 10% compounded annually. It took five years to accumulate the $50,000.

Q: In a present value or future value table, the length of one time period may be one year, one month, or any other length of time depending on the situation.

Q: The present value of 1 formula is often useful when a borrowed asset must be repaid in full at a later date and the borrower wants to know its worth at the future date.

Q: The present value factor for determining the present value of a single sum to be received three years from today at 10% interest compounded semiannually is 0.7462.

Q: The number of periods in a present value calculation can only be expressed in years.

Q: A company can use present and future value computations to estimate the interest component of holding assets over time.

Q: From the perspective of a depositor, a savings account is a liability with interest.

Q: Interest is the borrowers payment to the owner of an asset for its use.

Q: ______________ are amounts owed to suppliers for products or services purchased on credit.

Q: Unearned revenues are amounts received _________from______ for future products or services.

Q: _________________ are probable future payments of assets or services that a company is currently obligated to make as a result of past transactions or events.

Q: __________ are obligations due within one year or the company's operating cycle, whichever is longer.

Q: If a company had net income of $3,003,000; interest expense of $400,000; a tax rate of 40%; and operating income of $5,405,000, what would the times interest earned ratio be for the year?

Q: Cooper Company borrows $785,100 cash on November 1, 2013, by signing a 120-day, 8% note. What amount of interest expense should Cooper recognize in 2013?

Q: If Jefferson Company paid a bonus equal to 6.5% of net income after bonuses and the total bonus distributed was $560,000, how much was net income for the year?

Q: If a company paid $820,000 in bonuses, and net income before bonus was $3,850,000, what was the bonus percentage offered to the employees during this year?

Q: Apple Company has three employees: What is the amount that Apple Company will record as total payroll taxes for August?

Q: A company's payroll information for the month of May follows: Administrative salaries $2,000 Sales salaries 3,500 Shop wages 4,000 FICA taxes withheld 700 Federal income taxes withheld 1,300 Medical insurance premiums withheld 415 Union dues withheld 205 On May 31 the company issued Check No. 335 payable to the Payroll Bank Account for the May payroll. It issued payroll checks to the employees after depositing the check. (1) Prepare the journal entry to record (accrue) the employer's payroll for May. (2) Prepare the journal entry to pay for the May payroll. The federal and state unemployment tax rates are 0.8% and 5.4%, respectively, on the first $7,000 paid to each employee. The wages and salaries subject to these taxes were $6,000. (3) Prepare the journal entry to record the employer's payroll taxes.

Q: The payroll records of a company provided the following data for the currently weekly pay period ended March 7: Employees Earnings to End of Previous Week Gross Pay Federal Income Taxes Health Insurance Deduction Union Dues United Way A. Poe $ 5,800 $800 $120 $25 $10 $10 B. Rye 6,850 1,100 180 30 10 15 C. Sims 12,900 1,440 404 40 0 40 Assume that the Social Security portion of the FICA taxes is 6.2% on the first $106,800 and the Medicare portion is 1.45% of all wages paid to each employee for this pay period. The federal and state unemployment tax rates are 0.8% and 5.4%, respectively, on the first $7,000 paid to each employee. Calculate the net pay for each employee.

Q: A company's employer payroll taxes are 0.8% for federal unemployment taxes, 5.4% for state unemployment taxes, 6.2% for FICA Social Security taxes on earnings up to $106,800 and 1.45% for FICA Medicare taxes on all earnings. Compute the W-2 Wage and Tax Statement information required below for the following employees: Employee Gross Earnings Federal Income Taxes Withheld A. Barker $84,000 $17,600 C. Dirkson 52,000 8,200 W-2 Information A. Baker C. Dirkson Federal income tax withheld Wages, tips, other compensation Social Security tax withheld Social Security wages Medicare tax withheld Medicare wages

Q: Pastimes Co. offers its employees a bonus equal to 2% of the company's net income. The estimated net income for the year is expected to be $850,000. Prepare the general journal entry to record the employee bonus plan expense.

Q: A company sells computers with a six-month warranty. In January, the company sold 100,000 computers at $1,750 each and 1,500 computers were turned in for repairs during that same month. The total repairs amounted to $185,000 costs from the computer parts inventory. It is estimated that 2% of all units sold will need repairs under warranty at an estimated cost of $200 per unit. Prepare the journal entries to record (a) estimated warranty expense for January and (b) warranty repair costs for January.

Q: A company sells personal computers, with an included two-year warranty for $2,300 each. During the current year, the company sells 400 computers. On the basis of past experience, the warranty costs are estimated to be $250 per computer. The actual warranty costs (paid in cash) by the company during the current year were $65,000. Prepare general journal entries to record the (a) estimated warranty expense and (b) warranty repair costs during current year.

Q: . A company sells its product subject to a warranty that covers the cost of parts for repairs during the six months after the date of sale. Warranty costs are estimated to be 6% of sales. During the month of June, the company performed warranty work and used $12,000 worth of parts for the warranty repairs. The total sales for June were equal to $450,000. 1. Record the warranty expense for the month of June. 2. Record the costs of the warranty work completed in June. 3. If the Estimated Warranty Liability account had a credit balance of $10,000 on May 31, what is the account balance at June 30?

Q: An employer has an employee benefit package that includes employer-paid health insurance and an employer-paid retirement program. During January, the employer-paid health insurance equaled $7,500 and the amount the employer agreed to contribute to the employee retirement program was 10% of the employees' $150,000 gross salaries. Prepare the general journal entry to record these employee benefits.

Q: . A company's employees had the following earnings records at the close of the current payroll period: Employees Earnings through Prior Pay Period Earnings This Pay Period D. Adams $11,300 $3,900 J. Hess 6,100 2,500 R. Lui 9,500 3,100 T. Morales 4,800 1,400 L. Vang 10,000 3,000 The company's payroll taxes expense on each employee's earnings includes: FICA Social Security taxes of 6.2% on the first $87,000 plus 1.45% FICA Medicare on all wages; 0.8% federal unemployment taxes on the first $7,000; and 2.5% state unemployment taxes on the first $7,000. Compute the employer's total payroll taxes expense for the current pay period.

Q: A company's payroll for the week ended May 15 included earned salaries of $20,000. All of that week's pay is subject to FICA Social Security taxes of 6.2% and Medicare taxes of 1.45%. In addition, the company withholds the following amounts for this weekly pay period: $900 for medical insurance; $3,400 for federal income taxes; and $180 for union dues. a. Prepare the general journal entry to accrue the payroll. b. The company is subject to state unemployment taxes at the rate of 2% and federal unemployment taxes at the rate of 0.8%. By May 15, some employees had earned over $7,000, so only $9,000 of the $20,000 weekly gross pay was subject to unemployment tax. Prepare the general journal entry to accrue the employer's payroll tax expense.

Q: Metro Express has five sales employees, each of whom earns $4,000 per month and is paid on the last working day of the month. Each employee's wages are subject to FICA Social Security taxes of 6.2% and Medicare taxes of 1.45% on all wages. Withholding for each employee also includes federal income tax of 16% and monthly medical insurance premiums of $110 for each employee. a. Prepare the general journal entry to accrue the monthly sales salaries expense at January 31. b. The employer payroll taxes for Metro Express include: FICA taxes, federal unemployment taxes of 0.8% on the first $7,000 paid to each employee, and state unemployment taxes of 4.0% on the first $7,000 paid to each employee. Prepare the journal entry to record the employer's payroll taxes at January 31 for Metro Express.

Q: A company has 90 employees and a weekly payroll of $117,000. The FICA-Social Security tax is 6.2% and the FICA-Medicare tax is 1.45%. The total withholding for federal income tax is $16,500 for the current week. Calculate the amount of FICA taxes owed (assume no employee's salary is over the FICA limit) and prepare the journal entry to accrue this week's salaries expense and withholdings.

Q: A company has two employees whose total January salaries totaled $8,000. The federal income tax rate for both employees is 15%. The FICA Social Security tax is 6.2% and the FICA Medicare tax is 1.45%. Calculate the amount of employee taxes withheld and prepare the company's journal entry to accrue the January salaries expense and withholding of January taxes.

Q: An employee earned $3,450 wages for the current period. Calculate the total and individual amounts to be withheld for Social Security (6.2%), Medicare (1.45%) and federal income tax (15%) assuming the entire employee's pay is subject to FICA taxes.

Q: The rate for FICA Social Security is 6.2% and the rate for FICA Medicare is 1.45%. Calculate the total amount of FICA withholding for an employee whose pay is $2,400 and is entirely subject to these FICA taxes.

Q: A company borrowed $60,000 on a 60-day, 10% note payable from its bank. Compute the total cash payment at the note's maturity.

Q: On December 1, 2013, Gates Company borrowed $45,000 cash from First Bank on a 90-day, 9% note payable. Gates is a calendar year company a. Prepare Gate's general journal entry to record the issuance of the note payable. b. Prepare Gate's general journal entry to record the accrued interest due at December 31, 2013. c. Prepare Gate's general journal entry to record the payment of the note on March 1, 2014. Assume no other entries related to this note were made in 2014.

Q: On September 15, Sports World borrowed $75,000 cash from First Bank on a 12%, 60-day note payable. a. Prepare Sports World's general journal entry to record the issuance of the note payable. b. Prepare Sports World's general journal entry to record the payment of the note at maturity assuming no adjusting entries have been made since the note was first issued.

Q: On June 1, 2013, Martin Company signed a $25,000, 120-day, 6% note payable to cover a past due account payable. This company uses a calendar year to report financial activity. a. What is the total amount of interest to be paid on this note? b. Prepare Martin Company's general journal entry to record the issuance of the note payable, c. Prepare Martin Company's general journal entry to record the payment of the note on September 29, 2013 assuming no adjusting entries have been made since this note was first issued.

Q: On November 1, 2012, Bob's Skateboards Store signed a $12,000, 3-month, 5% note payable to cover a past due account payable. This company uses a calendar year to report financial activity and updates the accounting records monthly. a. What amount of total interest expense will the company pay on this note? b. Prepare Bob's general journal entry to record the issuance of the note payable. c. Prepare Bob's general journal entry to record the payment of the note on February 1, 2013.

Q: Walmart had income before interest expense and income taxes of $12,581 million and interest expense of $1,063 million. Sears had income before interest expense and income taxes of $3,596 million and interest expense of $1,143 million. Calculate the times interest earned ratio for each company and comment on the results.

Q: Coca-Cola had income before interest expense and income taxes of $5,698 million and interest expense of $199 million. Calculate Coca-Cola's times interest earned ratio.

Q: Home Depot had income before interest expense and income taxes of $5,909 million and interest expense of $37 million. Calculate Home Depot's times interest earned ratio.

Q: A company's income before interest expense and income taxes was $395,000 in 2013 and $427,000 in 2014. Its fixed interest expense was $125,000 for both years. Calculate the company's times interest earned ratio and comment on its level of risk.

Q: A company's income before interest expense and income taxes was $225,000 in 2013 and $200,000 in 2014. Its interest expense was $45,000 for both years. Calculate the company's times interest earned ratio and comment on its level of risk.

Q: A company's income before interest expense and income taxes is $302,400 and its interest expense is $72,000. Calculate the company's times interest earned ratio.

Q: Identify and discuss the factors involved in withholding federal income taxes from employees pay.

Q: Identify the types of payroll records prepared for each pay period and each employee.

Q: Describe employer responsibilities for reporting payroll taxes. (To the extent possible, reference the form to be filed for each tax.)

Q: What are estimated liabilities? Provide at least two examples and explain why they are classified as estimated liabilities.

Q: Explain the accounting procedures that employers must follow for employee payroll deductions.

Q: What is a short-term note payable? Explain the accounting issues related to notes payable.

Q: Explain how to calculate times interest earned and how this ratio is used to analyze a company.

Q: Describe how to account for and report on contingent liabilities.

Q: What are known current liabilities? Provide at least two examples of known current liabilities.