The following facts pertain to questions 1 and 2:
The Scepter Shop recorded October sales of $185,000. All sales are cash. Their one store is in an area with a 7.5% sales tax rate. Cost of goods sold for these sales amounted to 112,000. The Scepter Shop must pay its sales tax liability by the 15th day of the month following the month of sales.
1. What accounts will be affected in the transaction recording the October sales?
a. cash, sales tax expense, sales revenues
b. cash, sales tax payable, sales revenues
c. cash, sales revenues
d. cash, sales tax expense
2. When the sales taxes are paid on November 15, what accounts are involved in this transaction?
a. cash, sales tax expense
b. accounts payable, sales tax expense
c. cash, sales tax payable
d. none of the above.
The following information pertained to questions 3 through 5:
The Standard Company signed a note on November 15, 2013 when it borrowed $25,000. The note had a maturity date of 90 days and an APR interest rate of 6 %.
3. What was the amount of interest to be accrued on December 31, 2013? (Use the actual number of days method.)
4. What is the total amount of interest to be accrued for 2014? (Use the actual number of days method.)
5. When the note is finally paid off by Standard, which accounts are affected?
a. note receivable, interest expense
b. note payable, interest payable, cash
c. note receivable, interest expense, cash
d. note payable, interest expense, interest payable, cash
The following information pertains to questions 6 through 8:
Larry, Moe and Curly work for Stooges, Inc., which does not have a policy of paying time-and-a-half for hours worked in excess of 40 per week. The following information relates to a recent week:
Name Hourly Rate # hours worked Federal Income Tax withheld
Larry 7.50 45 15%
Moe 9.25 56 22%
Curly 8.50 38 20%
Social Security withholding is at 6%, Medicare withholding is at 1.5%.
6. Calculate the total gross wages of all three employees for the week.
7. What is the net pay of Curly for the week?
8. What is the total amount of Social Security and Medicare taxes that Stooges must send to the government for this week
9. The Whipsaw Company wants to accumulate $250,000 in 5 years in order to purchase a new machine. It prefers to make a one-time payment to a bank account that will pay 4%. How much must the single-sum payment be so that it will grow to $250,000 in 5 years at an APR of 4%?
10. The Quigley Company wants to set up a fund to pay off a $125,000 loan in 8 years. It can invest the same sum of money each year to an account that will pay 4%. What will Quigley s annual contribution to the fund be?