To install StudyMoose App tap and then “Add to Home Screen”
Save to my list
Remove from my list
Salta Company installs a manufacturing machine in its factory at the beginning of the year at a cost of $87,000. The machine’s useful life is estimated to be 5 years, or 400,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 84,500 units of product. Determine the machines’ second year depreciation under the units of production method: Answer: $16,900
Cost-Salvage Value/Total units of production
(87,000 – 7,000)/400,000 = .2
.2 * 84,500 = 16,900
Amortization:
Answer: Is the systematic allocation of the cost of an intangible asset to expense over its estimated useful life.
Big River Rafting pays $310,000 plus $15,000 in closing costs to buy out a competitor. The real estate consists of land appraised at $105,000, a building appraised at $210,000 and equipment appraised at $35,000. Compute the cost that should be allocated to the land. Answer: $97,500
105,000 + 210,000 + 35,000 = 350,000
105,000/350,000 = .3
.3 * 325,000 = 97,500
Leasehold:
Answer: are the rights granted to the lessee by the lessor of a lease. Copyright:
Answer: Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years.
Verified writer
Proficient in: Taxation
4.7 (235)
“ Amazing writer! I am really satisfied with her work. An excellent price as well. ”
A patent:
Answer: Gives its owner exclusive right to manufacture and sell a patented item or to use a process for 20 years. Carmel Company acquires a mineral deposit at a cost of $5,900,000. It incurs additional costs of $600,000 to access the deposit, which is estimated to contain 2,000,000 tons and is expected to take 5 years to extract. Compute the depletion expense for the first year assuming 418,000 tons were mined. Answer: $1,358,500
5,900,000 + 600,000 = 6, 500,000
Cost – Salvage Value/ Total Units of Capacity
6,500,000-0/2000000 = 3.25
3.25 * 418,000 = 1,358,500
Cambria Company reports net sales of $4,315 million; cost of goods sold of $2,808 million; net income of 283 million; and average total assets of $2,136. Compute its total asset turnover.
Answer: 2.02
Net Sales/Average Total Asset
4,315/2,136 = 2.02
Salta Company installs a manufacturing machine in its factory at the beginning of the year at a cost of $87,000. The machine’s useful life is estimated to be 5 years, or 400,000 units of product, with $7,000 salvage value. During its second year, the machine produces 84,500 units of product. Determine the machine’s second year depreciation under the straight-line method. Answer: $16,000
Cost – salvage value/useful life in periods
87,000 – 7,000/5 =16,000
A depreciation asset costing $75,000 is purchased on September 1, year 1. The asset is estimated to have a salvage value of $10,000 and an estimated useful life of 4 years. Double-declining-balance depreciation is used. If the asset is sold on December 31, Year 3 for $13,000, the journal entry to record the sale will include: Answer: A debit to loss on sale for $2,625.
Chapter 11 Quizzes
The current FUTA tax rate is 0.8% and SUTA tax rate is 5.4%. Both taxes are applied to the first $7,000 of an employee’s pay. Assume that an employee earned $8,900. What is the amount of total unemployment taxes the employer must pay on the employee’s wages? Answer: 434.00
7,000*5.4% = 378
7000*0.8% = 56
378 + 56 = 434
FICA taxes include:
Answer: Social Security taxes
Liability:
Answer: Must sometimes be estimated
If the times interest ratio:
Answer: Increase then the risk decreases.
Gross pay is?
Answer: Total compensation earned by an employee before any deductions. A company’s income before interest expense and taxes is $250,000 and its interest expense is $100,000. It’s times interest earned ratio is: Answer: 2.50
Income before Interest expense and income taxes/Interest Expense 250,000/100,000 = 2.50
Employee vacation benefits:
Answer: are estimated liabilities
The amount of federal income taxes withheld from an employee’s paycheck is determined by: Answer: the amount of the employee’s current earnings for the pay period and number of withholding allowances the employee claims. Amount received in advanced from customers for future products or services: Answer: are liabilities
A company estimates that a warranty expense will be 4% of sales. The company’s sales for the current period are $185,000. The current period’s entry to record warranty expense is: Answer: Debit warranty expense $7,400; credit estimated warranty liability $7,400 185,000*4% = 7,400
An employee earned 62,500 during the year working for an employer. The FICA tax rate for social security is 6.2% and FICA tax rate for Medicare is 1.45%. The current FUTA tax rate is 0.8% and SUTA is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee’s pay. What is the total unemployment taxes does the employee have to pay? Answer: $0.00 Employees do not pay unemployment taxes.
FUTA taxes are:
Answer: unemployment taxes
Arena Company’s salaried employee’s earned two weeks’ vacation per year. It pays $858,000 in total employee salaries for 52 weeks but its employees work only 50. Record Arena Company’s weekly journal entry to record the vacation expense; Answer: Debit vacation benefits expense $17,160; Credit vacation benefits payable $17,160 858,000/50 = 17,160
A company sells computers at a selling price of $1,800 each. Each computer has a 2 year warranty that covers replacement of defective parts. It is estimated that 2% of all computers sold will be under the warranty at an average cost of $150 each. During November the company sold 30,000 computers and 400 computers were serviced under the warranty at total cost of 55,000. The balance is the estimated warranty liability account at November 1 was $29,000. What is the company’s warranty expense for the month of November? Answer: 90,000
(30,000*2%*150) = 90,000
A company had fixed interest expense of $6,000, its income before interest expense and any income taxes is $18,000, and its net income is $8,400. The company’s Times interest earned ratio equals: Answer: 3.0
Advanced ticket sales totaling $6,000,000 cash would be recognized as follows: Answer: Debit Cash; Credit Unearned Revenue During August, Arena Company sells $356,000 in product that has a one year warranty. Experience shows that warranty expenses average about 5% of the selling price. The warranty liability account has a balance of $12,800 before adjustment. Customers returned product for warranty repairs during the month that used $9,400 in parts and repairs. The entry to record customer warranty repairs is: Answer: Debit Estimated Warranty Liability $9,400; credit Parts Inventory $9,400 Obligations not expected to be paid within the longer of one year or the company’s operating cycle is reported as: Answer: Long-term liability
Times Interest earned computation is:
Answer: (Net Income + Interest expense + Income taxes)/Interest expense The difference between the amount received from issuing a note payable and the amount repaid is referred to as: Answer: Interest
A contingent Liability:
Answer: is a potential obligation that depends on a future event arising from a past transaction or event. In the accounting records of a defendant, lawsuits:
Answer: should be recorded if payment for damages is probable and the amount can be reasonably estimated. A company’s fixed interest expense is $8,000 its income before interest expense and income taxes is $32,000. Its net income is $9,600. The company’s time’s interest earned ratio equals: Answer: 4.0
An Estimated Liability:
Answer: Is a known obligation of an uncertain amount that can be reasonably estimated. Recording employee payroll deduction may involve:
Answer: Liabilities to individual employees, Liabilities to federal and state governments, Liabilities to insurance companies, and Liabilities to labor unions. Chapter 12 Quizzes
Kevin and Jeannie formed This & That as a limited liability company. Unless the member owners elect to be treated otherwise, the IRS will tax the LLC as: Answer: a partnership
A partnership that has two classes of partners, general and limited, where the limited partners have no personal liability beyond the amounts they invest in that partnership, and no active role in the partnership, except as specified in the partnership agreement is a: Answer: Limited Partnership
Groh and Jackson are partners. Groh’s capital balance in the partnership is $64,000, and Jackson’s capital balance is $61,000. Groh and Jackson have agreed to share equally in income and loss. Groh and Jackson agree to accept Block with a 20%interest. Block will invest $35,000 in the partnership. The bonus that is granted to Groh and Jackson equals: Answer: $1,500
1.64,000 + 61,000=125,000
2. 125,000 + 35,000=160,000
3. 160,000*20%= 32,000
4.35,000 – 32,000 = 3,000
5. 3,000*1/2= 1,500
Badger and Fox are forming a partnership. Badger invests a building that has a market value of $350,000; the partnership assumes responsibility for a $125,000 note secured by a mortgage on the property. Fox invest $100,000 in cash and equipment that has a market value of $75,000. For the partnership the amount recorded for Badgers capital and Fox’s capital are: Answer: Badger $225,000 and Fox $175,000
Badger 35,000-125,000 = 225,000; Fox 100,000 + 75,000 = 175,000
Regina Harrison is a partner in Pressed for Time. An analysis of Regina’s capital account indicates that during the most recent year, she withdrew $20,000 from the partnership. Her share of the partnership’s net loss was $16,000 and she made an additional equity contribution for $10,000. Her capital account ended the year at $150,000, what was her capital balance at the beginning of the year? Answer: $176,000
10,000 – 16,000 – 20,000 = -26,000
150,000 – (-26,000) = 176,000
Collins and Farina are forming a partnership Collins is investing in a building that as market value of $80,000. However the building carries a $56,000 mortgage that will be assumed by the partnership. Farina is investing $20,000 cash. The balance of Collins capital Account will be: Answer: $24,000
80,000 – 56,000 = 24,000
A partnership in which all partners have mutual agency and unlimited liability is called: Answer: General Partnership In the absence of a partnership agreement, the law says that income (and loss) should be allocated based on: Answer: Equal shares Groh and Jackson are partners. Groh’s capital balance is $64,000 and Jackson’s capital balance is $61,000. They have agreed to share equally in income or loss. Groh and Jackson agree to accept Block with a 25% interest. Block will invest $35,000 in the partnership. The bonus that is granted to Block equals: Answer: 5,000
64,000 + 61,000 = 125,000; 125,000 +35,000 = 160,000; 160,000*25% = 40,000; 40,000 – 35,000= 5,000 Nee High and Low Jack are partners. They share income and loss equally. Highs beginning partnership capital balance for the current year is $285,000 and Jack’s is $370,000. The partnership had net income of $250,000 for the year. High withdrew $90,000 and Jack withdrew $100,000. What is Jack’s return on equity? Answer: 41.3%
A partnership agreement:
Answer: is binding even if it is not in writing.
A partnership designed to protect innocent partners from malpractice or negligence claims resulting from acts of another partner is: Answer: Limited Liability Partnership
Partner’s withdrawals of assets are:
Answer: Debited to their withdrawals account Sam, Bart, and Alex are dissolving their partnership. Their partnership agreement allocates each partner 1/3 of all income and losses. The current period’s capital account balances are Sam, $45,000; Bart, $37,000; and Alex, $(5,000). After all assets are sold and liabilities are paid, there is $77,000 in cash to be distributed. Alex is unable to pay the deficiency.
The journal entry to record the distribution should be: Answer: Debit Sam, Capital $42,500; Debit Bart, Capital $37,000; Credit Cash $77,000 Smith, West, and Krug form a partnership. Smith contributes $180,000, West contributes $150,000 and Krug contributes $270,000. Their partnership agreement calls for the income or loss division to be based on the ratio of capital invested. If the partnership reports income of $175,000 for its first year, what amount of income is credited to Smith’s capital account? Answer: $52,500
Smith 180,000/600,000 = .3
.3 * 175,500 = 52,500
Smith, West and Krug form a partnership. Smith contributes $180,000, West contributes $150,000, and Krug contributes $270,000. Their partnership agreement calls for the income and loss division to be based on the ratio of capital invested. If the partnership reports income of $175,000 for its
first year, what amount of income is credited to Krug’s capital account? Answer: $78,750
Krug 270,000/600,000 = .45
.45 * 175,000 = 78,750
Smith, West, and Krug form a partnership. Smith contributes $180,000, West contributes $150,000, and Krug contributes $270,000. Their partnership agreement calls for a 5% invest allowance on the partner’s capital balances with the remaining income or loss to be allocated equally. If the partnership reports income of $174,000 for its first year, what amount of income is credited to West’s capital account? Answer: $55,500
Smith, West, and Krug form a partnership. Smith contributes $180,000, West contributes $150,000and Krug contributes $270,000. Their partnership agreement calls for a 5% interest allowances on the partner’s capital balances with the remaining income or loss to be allocated equally. If the partnership reports income of $174,000 for its first year, what amount of income credited to Krug’s capital account? Answer:
Badger and Fox are forming a partnership. Badger invests a building that has a market value of $350,000; the partnership assumes responsibility for a $125,000 note secured by a mortgage on the property. Fox invests $100,000 in cash and equipment that has a market value of $75,000. For the partnership, the amounts recorded for total assets and for total capital account are: Answer:
In a partnership agreement, if partners agreed to an interest allowance of 10% annually on each partner’s investment, the interests allowance: Answer: Can make up for unequal capital contributions
When a partner is unable to pay a capital deficiency: Answer: The deficiency is absorbed by the remaining partners before distribution of cash. Chase and Hatch are partners and share equally in income or loss. Chase’s current capital balance is $135,000 and Hatch’s is $120,000. Chase and Hatch agree to accept Flax with a 30% interest in the partnership. Flax invests $115,000 in the partnership. The amount credited to Flax’s capital account is: Answer: $111,000
135,000 +120,000 = 255,000
255,000 + 115,000 = 370,000
370,000*30% = 111,000
Chase and Hatch are partners and share equally in income or loss. Chase’s current capital balance is $135,000 and Hatch’s is $120,000. Chase and Hatch agree to accept Fax with a 30% interest in the partnership. Flax invests $115,000 in the partnership. The balances in Chase’s and Hatch’s capital accounts after admission of the new partner equal: Answer:
The following information is available regarding John Smith’s capital account in Technology Consulting Group, a general partnership, for a recent year: Beginning of the year balance $22,000
His share of partnership income $8,500
Withdrawals made during the year $6,000
What is smith’s partner return on equity during the year in question? Answer: 36.6%
22,000+8,500-6,000=24,500
8,500/(22,000+24,500)/2=.3655=36.6%
Cost-Salvage Value/Total units of production. (2016, May 12). Retrieved from https://studymoose.com/cost-salvage-valuetotal-units-of-production-essay
👋 Hi! I’m your smart assistant Amy!
Don’t know where to start? Type your requirements and I’ll connect you to an academic expert within 3 minutes.
get help with your assignment
