ANSWERS TO SAMPLE TEST #4
PART A:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
F
T
T
F
T
F
F
T
T
F
T
F
F
T
T
F
T
F
T
T
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
C
D
D
A
B
A
C
B
B
C
A
D
A
C
B
C
A
C
D
D
41
42
43
44
45
46
47
48
49
50
B
A
A
C
B
D
C
A
C
A
PART B:
PROBLEMS (various points - see below - total of 50 pts):
1.
During one week, three employees of the Snowshoe Lodge worked the number of
hours shown below. All these employees receive overtime for any hours worked
beyond 40 in a week. Compute regular earnings, overtime earnings, and gross
pay for each employee (10 points).
Employee Name
Regular
Hourly
Rate
$22.00
Hours
Worked
Regular
Earnings
Overtime
Earnings
Gross Pay
46
$880.00
$198.00
$1078.00
Miguel Rodriguez
$12.00
44
$480.00
$72.00
$552.00
Melanie Young
$8.50
45
$340.00
$63.75
$403.75
Janet Jones
2.
The monthly salaries for December and the year-to-date earnings as of
November 30 for the three employees of the Lakeview Medical Center are listed
below. Compute the amount of social security tax and Medicare tax to be
withheld from each employee's gross pay for December (10 points).
Employee Name
December
Gross Pay
Vince Kim
$5,500
Cumulative
Earnings
through Nov.
30
$90,500
Social Security
Tax for Dec.*
Medicare Tax
for Dec.
0
$79.75
Adriana Greitas
7,000
87,600
$148.80
$101.50
Andy Smitsky
6,500
85,500
$279.00
$94.25
At the time the test was given, the cap for Social Security was at $90,000
3.
The Rollins Company has two office employees and two shipping employees. A
summary of their earnings and deductions for the week ended June 14, 2004, is
shown below. On page 6 of a general journal (use the form below), record the
June 14 payroll and the entry on June 16 to issue the paychecks (10 pts).
Earnings and Deductions
Gross Earnings
Social Security Tax
Medicare Tax
Income Tax
Health Insurance
Net Pay for Week
Office Employees
$1,150.00
71.30
16.68
135.00
23.00
$904.02
Shipping Employees
$980.00
60.76
14.21
94.00
23.00
$788.03
GENERAL JOURNAL
DATE
1
2
3
4
5
6
7
8
9
DESCRIPTION
04
Jun 14 Office Salary Expense
Shipping Wages Expense
Social Security Tax Payable
Medicare tax Payable
Income Tax Payable
Health Insurance Premium Payable
Salaries and Wages Payable
To record payroll for week ended Jun 14
Page ___6
POST.
REF.
DEBIT
1
1 1 5 0 00
9 8 0 00
12
13
2
3
1 3 2 06
3 0 89
2 2 9 00
4 6 00
1 6 9 2 05
4
5
6
7
8
9
10
11
CREDIT
10
16 Salaries and Wages Payable
Cash
To record the issue of paychecks
1 6 9 2 05
11
1 6 9 2 05 12
13
14
14
15
15
16
16
17
17
18
18
19
19
20
20
4.
On July 31, 2004, after one month of operation, the general ledger of Dakota
Consulting contained the following accounts and balances. The firm adjusts
losses from uncollectible accounts only at the end of the fiscal year. Monthly
adjustments are listed below. Journalize the following adjustments (a-e).
ACCOUNT
Cash
Accounts Receivable
Allowance for Doubtful Accts
Supplies
Prepaid Insurance
Office Equipment
Accum Depr - Office Equipment
Notes Payable
Accounts Payable
BALANCE
$13,425 Dr
9,500 Dr.
125 Cr.
650 Dr.
3,000 Dr.
14,500 Dr.
-14,000 Cr.
700 Cr.
ACCOUNT
Interest Payable
Salaries Payable
Key Dakota, Capital
Key Dakota, Drawing
Fees Incomes
Salaries Expense
Supplies Expense
Insurance Expense
Depr Exp - Office Equipment
Interest Expense
BALANCE
-$600 Cr.
22,800 Cr.
2,600 Dr.
16,500 Cr.
11,050 Dr.
-----
Adjustments (mark both a debit and a credit with the corresponding letter):
(a)
On July 31, an inventory of the supplies showed that items costing $250 were
on hand.
(b)
On July 31, one month of a 3-month prepaid insurance expired.
(c)
On July 1, the firm issued a 3-month, 9 percent note for $4,000.
(d)
On July 1, the firm purchased office equipment for $14,500. The office
equipment is expected to have a useful life of 5 years and a salvage value of
$1,000.
(e)
On July 31, accrued salaries to part-time employees were $2,000. The salaries
will not be paid until August 2.
ANSWERS:
7/31
Supplies Expense
Supplies
7/31
Insurance Expense Dr 1000
Ppd Insurance
Cr 1000
7/31
Interest Expense
Dr 30
Interest Payable
Cr 30
7/31
Depr Exp – Office Equipment
Dr 225
Accumulated Depreciation – Office Eq
7/31
Dr 400
Cr 400
Salaries Expense
Dr 2000
Salaries Payable
Cr 2000
Cr 225
5.
Calculate the cost of goods section of the income statement (for the period of the
year ended December 31, 2005), using those of the following account balances,
which are required (10 pts):
Cash
$10,180
Accounts Receivable
26,420
Merchandise Inventory, January 1, 2005
42,160
Merchandise Inventory, December 31, 2005
44,300
Equipment
38,000
Accounts Payable
41,200
Mortgage Payable
9,000
Purchases
81,300
Freight In
600
Purchase Returns and Allowances
2,900
Purchase Discounts
1,510
Sales
141,800
COST OF GOODS SOLD:
Beginning Inventory, January 1, 2005
Net Delivered Cost of Purchases
Purchases
Plus Freight In
Delivered Cost of Purchases
Less Purchase R&A
2,900
Purchases Discounts
1,510
Net Delivered Cost of Purchases
42,160
81,300
+600
81,900
-4,410
+77,490
Total Merchandise Available for Sale
Less Ending Inventory, December 31, 2005
119650
-44,300
Cost of Goods Sold
75,350
6.
The following accounts appear on the worksheet of East Bay Pet Clinic. Indicate
the section of the classified income statement or classified balance sheet in which
each account will be reported (10 points).
Sections of Classified Income Statement or Balance Sheet:
A.
Operating Revenue
B.
Cost of Goods Sold
C.
Operating Expenses
D.
Other Income
E.
Other Expenses
F.
Current Assets
G.
Plant and Equipment (Fixed Assets)
H.
Current Liabilities
I.
Long-Term Liabilities
J.
Owner’s Equity
Letter(s)
__A____
__F____
__J____
__B____
__H____
__G____
__A____
__G____
__C____
__F & B
__F____
__D____
__I_____
__F____
__C____
__B____
__G____
__E____
__C____
__F____
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Accounts:
Sales Returns and Allowances
Office Supplies
Olga Ramirez, Capital
Purchase Discounts
Medicare Tax Payable
Truck
Sales Discounts
Accumulated Depreciation – Medical Equipment
Salaries Expense
Merchandise Inventory
Prepaid Advertising
Rent Income
Notes Payable (on 2- and 3-year notes)
Accounts Receivable
Depreciation Expense – Medical Equipment
Purchases
Building
Interest Expense
Truck Expense
Petty Cash Fund