ACC 291 WileyPLUS

Practice Question 1
Don Walls’s gross earnings for the week were $1,780, his federal income tax withholding was $301.63, and his FICA total was $135.73.
What was Walls’s net pay for the week?

Journalize the entry for the recording of his pay in the general journal. (Note: Use Salaries Payable; not Cash.) (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2. Round answers to 2 decimal places, e.g. 10.50.)
Record the issuing of the check for Walls’s pay in the general journal. (Round answers to 2 decimal places, e.g. 10.50.)

Practice Question 2
On January 1, Neuer Company issued $500,000, 10%, 10-year bonds at par. Interest is payable semiannually on July 1 and January 1.
Prepare journal entries to record the following.
The issuance of the bonds.

The payment of interest on July 1, assuming that interest was not accrued on June 30.
The accrual of interest on December 31.
Practice Question 3

On January 1, Flory Company issued $300,000, 8%, 5-year bonds at face value. Interest is payable semiannually on July 1 and January 1.
Prepare journal entries to record the following events.
The issuance of the bonds.
The payment of interest on July 1, assuming no previous accrual of interest.

The accrual of interest on December 31.

Practice Question 4
Leoni Co. receives $240,000 when it issues a $240,000, 10%, mortgage note payable to finance the construction of a building at December 31, 2011. The terms provide for semiannual installment payments of $20,000 on June 30 and December 31.
Prepare the journal entries to record the mortgage loan and the first two installment payments. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)

Practice Question 5
Fordyce Electronics issues a $400,000, 8%, 10-year mortgage note on December 31, 2010. The proceeds from the note are to be used in financing a new research laboratory. The terms of the note provide for semiannual installment payments, exclusive of real estate taxes and insurance, of $29,433. Payments are due June 30 and December 31.

Complete the installment payments schedule for the first 2 years. (Round answers to 0 decimal places, e.g. 125. Use rounded amounts for future calculations.)

Prepare the entries for (1) the loan and (2) the first two installment payments. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2. Round answer to 0 decimal places, e.g. 125.)
Show how the total mortgage liability should be reported on the balance sheet at December 31, 2011. (Round answer to 0 decimal places, e.g. 125

Practice Question 6
Elkins Company sold $2,500,000, 8%, 10-year bonds on July 1, 2011. The bonds were dated July 1, 2011, and pay interest July 1 and January 1. Elkins Company uses the straight-line method to amortize bond premium or discount. Assume no interest is accrued on June 30.

Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2011, assuming that the bonds sold at 104. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)
Prepare journal entries as in the previous part of the question assuming that the bonds sold at 98. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)
Show balance sheet presentation for each bond issue at December 31, 2011. (Enter all amounts as positive amounts and subtract where necessary.)

Practice Question 7
Indicate whether each of the following statements is true or false.
1.         The corporation is an entity separate and distinct from its owners.
2.         The liability of stockholders is normally limited to their investment in the corporation.
3.         The relative lack of government regulation is an advantage of the corporate form of business.
4.         There is no journal entry to record the authorization of capital stock.
5.         No-par value stock is quite rare today.

Practice Question 8
Before preparing financial statements for the current year, the chief accountant for Springer Company discovered the following errors in the accounts.
The declaration and payment of $50,000 cash dividend was recorded as a debit to Interest Expense $50,000 and a credit to Cash $50,000.
A 10% stock dividend (1,000 shares) was declared on the $10 par value stock when the market value per share was $16. The only entry made was: Retained Earnings (Dr.) $10,000 and Dividend Payable (Cr.) $10,000. The shares have not been issued.
A 4-for-1 stock split involving the issue of 400,000 shares of $5 par value common stock for 100,000 shares of $20 par value common stock was recorded as a debit to Retained Earnings $2,000,000 and a credit to Common Stock $2,000,000.
Prepare the correcting entries at December 31

Practice Question 9
The following stockholders’ equity accounts arranged alphabetically are in the ledger of McGrath Corporation at December 31, 2011.

Common Stock ($10 stated value)           $1,500,000
Paid-in Capital from Treasury Stock          6,000
Paid-in Capital in Excess of Stated Value-Common Stock    690,000
Paid-in Capital in Excess of Par Value-Preferred Stock         288,400
Preferred Stock (8%, $100 par, noncumulative)    400,000
Retained Earnings          776,000
Treasury Stock-Common (8,000 shares)    88,000
Complete the stockholders’ equity section at December 31, 2011. (List entries by the format used in the text. Enter all amounts as positive amounts and subtract where necessary.)