Problem #1

On November 1, 2009, Broom Company received a bank statement that showed a $2,950 balance. Broom showed a $4,010 checking account balance. The bank didn’t return check No. 124 for $1,080 and check No. 138 for $720. A $3,200 deposit made on October 30 was in transit. The bank charged Broom $12 for check printing and $18 for an NSF check. Broom forgot to record a $30 withdrawal at the ATM. The bank also collected a $400 note for Broom. Prepare a bank reconciliation.

Problem #2

Erasers cost $5 per carton and pencils cost $7 per carton. If an order comes in for a total of 15 cartons for $85, how many cartons of each were bought?

Problem #3

The price of a hamburger increased from $1.10 to $1.59. What percent did the price increase?

Problem #4

Morgan Company received from Lee Company an invoice dated September 27. Terms were 2/10 EOM. List price on the invoice was $5,000 (freight not included). Morgan receives a 9/7 chain discount. Freight charges are Morgan’s responsibility but Lee agreed to prepay the $150 freight charge. Morgan pays the invoice November 9. What does Morgan pay Lee?

Problem #5

Sullivan’s Handbags marks up their bags at 45% of the selling price. Pat Sullivan saw a bag at a trade show that she would sell to her customers for $85. What is the most she could pay for the bag and still retain the 45% markup of the selling price?

Problem #6

Jeff Jones earns $1,200 per week. He is married and claims four withholding allowances. The FICA rate is as follows: Social Security rate is 6.2% on $97,500; Medicare rate is 1.45%. To date his cumulative wages are $6,000. Each paycheck, his employer also deducts $42.50 for health insurance. What is his net pay? (Calculate FIT by the percentage method.)

Problem #7

Lisa Kane borrowed $8,000 on an 8%, 60-day note. After 15 days, Lisa paid $2,000 on the note. On day 45, Lisa paid $1,000 on the note. What is the total interest and ending balance due by the U.S. rule? Use ordinary interest.

Problem #8

On May 12, Bob Campbell accepted a $5,000 note in granting a time extension of a bill of goods bought by Rick Ween. Terms of the note were 8% for 120 days. On July 8, Bob needed to raise cash and discounted the note at Rick’s bank at a discount rate of 9%. Calculate Bob’s proceeds.

Problem #9

Jacob Fonda deposited $25,000 in a savings account at 10% interest compounded semiannually. At the beginning of Year 4, Jacob deposits an additional $40,000 at 10% interest compounded semiannually. At the end of six years, what is the balance in Jacob’s account?

Problem #10

Roger Fox made deposits of $900 semiannually to Reel Bank, which pays 6% interest compounded semiannually. After seven years, Roger made no more deposits. What would be the balance in the account eight years later from the last deposit?

Problem #11

Dick Hercher borrowed $7,000 to travel to London. His loan is to be paid in 48 monthly installments of $190. At the end of 14 months, Dick decides to pay off his loan. What is the final payoff Dick will make?

Problem #12

A condo is advertised in The Wall Street Journal for $350,000. It states in the ad that a 20% down payment is required. The rate of interest is 11% on a 25-year mortgage. What would be (A) the monthly payment along with (B) the total cost of interest?

Problem #13

Use this information to calculate the following:

Sales returns $ 700

Rent expense 1,288

Sales discounts 950

Depreciation expense 600

Cost of merchandise sold 7,600

Gross sales 20,900

Advertising expense 1,650

Salary expense 2,900

Heat expense 900

A. Net sales

B. Gross profit

C. Total operating expenses

D. Net Income

Problem #14

A truck costing $25,000 with a residual value of $5,000 was purchased by Rim Corporation. The truck’s estimated life is 10 years. At the end of Year 2, what is the book value using declining-balance method? Assume a depreciation rate of twice the straight-line method.

Problem #15

A toy store has a beginning inventory of eight sets of paints at a cost of $1.25 each. During the year, the toy store purchased three at $1.50, five at $2, six at $2.50, and ten at $3. By the end of the year, 21 sets were sold. Calculate the following:

A. The number of paint sets in stock

B. The cost of ending inventory under LIFO

C. The cost of ending inventory under FIFO

D. The cost of ending inventory under Weighted Average

Problem #16

Pete’s Warehouse has a market value of $5,000,000. The property in Pete’s area is assessed at 40% of the market value. The tax rate is $105.10 per $1,000 of assessed value. What is Pete’s property tax?

Jim Smith, who lives in Territory 5, carries 10/20/5 compulsory liability insurance along with optional collision that has a $200 deductible. Jim was at fault in an accident that caused $1,800 damage to the other auto and $600 damage to his own. Also, the courts awarded $13,000 and $8,000 respectively, to the two passengers in the other car for personal injuries. How much does the insurance company pay, and what is Jim’s share of responsibility?

Problem #19

Sales at Sullivan Realty totaled 10 homes for the month.

They were as follows: $ 182,900

189,000

160,000

210,000

175,000

158,000

99,000

126,000

185,000

109,000

Calculate the mean and median.

The property of Al’s garage is worth $300,000. Al has a fire insurance policy of $180,000 that contains an 80% coinsurance clause. What will the insurance company pay on a fire that causes $210,000 damage? If Al met the coinsurance requirement, how much would the insurance company have to pay?

Problem #21

Earl Miller plans to buy a boat for $19,500 with an interest charge of $2,500. Earl figures he can afford a monthly payment of $650. If Earl has to pay 36 equal monthly payments, by how much can he afford the boat per month?

Problem #22

Peter Mabel sold a total of 400 Oatmeal ($1.50) and Wheat ($2) breads during the Labor Day weekend. How many of each did Pete sell if total sales were $700?

Problem #23

Mel’s Furniture received an invoice dated September 27 for five bedroom sets at $3,000 each. The invoice indicated a trade discount of 5/8/3. The seller of the furniture prepaid the freight of $200. Terms were 2/10 EOM. Assuming Mel pays on November 2, what amount would be paid? (Be sure to include the freight cost.)

Problem #24

Mobilee Oil Company accepted a $10,000, 120-day note, dated March 3, at 8.5% to settle a past due accounts receivable. Mobilee Oil discounted the note to raise cash on May 10 at a discounted rate of 9%. What proceeds did Mobilee Oil receive?

Problem #25

Ray Long wants to retire in Arizona when he is 70 years of age. Ray is now 50. He believes he will need $130,000 to retire comfortably. To date, Ray has set aside no retirement money. Assume Ray gets 14% interest compounded semiannually. How much must Ray invest today to meet his $130,000 goal?