FA2FINALREVIEW_ANSWER

FA2FINALREVIEW_ANSWER - Financial Accounting II FINAL EXAM...

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Unformatted text preview: Financial Accounting II FINAL EXAM REVIEW Chapters 10-17 Dr. Seyedin SOLUTIONS 1. Define current liabilities. Liabilities that are to be paid out of current assets & are due within a short time, usually one year, are called current liabilities. 2. On June 5, Apex Co. issued a $100,000, 10%, 90-day note payable to Jones Co. What is the maturity value of the note? $100,000 x 10% x 90/360 = $2,500 $100,000 + $2,500 = $102,500 3. Define the term proceed. Proceed is the difference between face amount of the note and the discount (interest). 4. Define the term discount. Discount is a borrowing arrangement in which the bank subtracts the interest amount from notes face value. In effect, the borrower prepays the interest, which is computed on the notes principle. 5. On June 5, Apex Co. issued a $100,000, 10%, 90-day discounted note payable to Jones Co. What is the maturity value of the note? $100,000 6. What is the journal entry to convert an existing account payable to a note payable? Debit A/P, credit N/P When note matures, the entry is: Debit N/P & Interest Expense, Credit Cash 7. Name the taxes that employers are required to withhold from employees. Federal income tax, state income tax, social security tax, and Medicare tax 8. Define the term take-home pay. Take-home pay is gross earnings for a payroll period less payroll deductions. 9. Define the term gross pay. Gross pay is total earnings of an employee for a payroll period, including bonuses & overtime. 10. An employee receives an hourly rate of $30, with time and a half for all hours worked beyond 40 during a week. Payroll data for the current week are as follows: Hours worked: 47 Federal income tax withheld: $200 Cumulative earnings for year prior to current week $56,000 Social security: 6% on maximum of $60,000 Medicare rate of 1.5% on all earnings. What is the gross pay for the employee? $30 x 47 hours = $1,410 $15 x 7 hours = $105 Gross pay = $1,410 + $105 = $1,515 11. An employee receives an hourly rate of $20, with time and a half for all hours worked beyond 40 during a week. Payroll data for the current week are as follows: Hours worked: 47 Federal income tax withheld: $200 Cumulative earnings for year prior to current week $59,700 Social security: 6% on maximum of $60,000 Medicare rate of 1.5% on all earnings. What is the net pay for the employee? $20 x 47 hours = $940 $10 x 7 hours = $70 Gross pay = $940 + $70 = $1,010 Gross pay $1,010 Less: Federal income tax $200 Social security $18.00 1 Medicare $15.15 2 $233.15 Net pay $776.85 Only $300 of the $1,010 is subject to social security tax as the employee has paid taxes on the cumulative earnings of $59,700 and is $300 away from reaching the taxable ceiling of $60,000....
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FA2FINALREVIEW_ANSWER - Financial Accounting II FINAL EXAM...

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