Corporation and Partnership

Salta Company installs a manufacturing machine in its factory at the beginning of the year at a cost of $87,000. The machine’s useful life is estimated to be 5 years, or 400,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 84,500 units of product. Determine the machines’ second-year depreciation under the units of production method: Answer:
$16,900 Cost-Salvage Value/Total units of production
(87,000 – 7,000)/400,000 = 0. 2

0.2 * 84,500 = 16,900
Amortization: Answer: Is the systematic allocation of the cost of an intangible asset to expense over its estimated useful life.
Big River Rafting pays $310,000 plus $15,000 in closing costs to buy out a competitor. The real estate consists of land appraised at $105,000, a building appraised at $210,000 and equipment appraised at $35,000. Compute the cost that should be allocated to the land. Answer: $97,500
105,000 + 210,000 + 35,000 = 350,000
105,000/350,000 = 0. 3
0.3 * 325,000 = 97,500
Leasehold: Answer: are the rights granted to the lessee by the lessor of a lease.
Copyright: Answer: Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years.
A patent: Answer: Gives its owner exclusive right to manufacture and sell a patented item or to use a process for 20 years. Carmel Company acquires a mineral deposit at a cost of $5,900,000. It incurs additional costs of $600,000 to access the deposit, which is estimated to contain 2,000,000 tons and is expected to take 5 years to extract. Compute the depletion expense for the first year assuming 418,000 tons were mined. Answer:
$1,358,500 5,900,000 + 600,000 = 6, 500,000
Cost – Salvage Value/ Total Units of Capacity
6,500,000-0/2000000 = 3. 25
3.25 * 418,000 = 1,358,500
Cambria Company reports net sales of $4,315 million; the cost of goods sold of $2,808 million; net income of 283 million; and average total assets of $2,136. Compute its total asset turnover. Answer: 2. 02 Net Sales/Average Total Asset 4,315/2,136 = 2. 02 Salta Company installs a manufacturing machine in its factory at the beginning of the year at a cost of $87,000. The machine’s useful life is estimated to be 5 years, or 400,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 84,500 units of product.
Determine the machine’s second-year depreciation under the straight-line method. Answer: $16,000 Cost – salvage value/useful life in periods 87,000 – 7,000/5 =16,000
A depreciation asset costing $75,000 is purchased on September 1, year 1. The asset is estimated to have a salvage value of $10,000 and an estimated useful life of 4 years. Double-declining-balance depreciation is used. If the asset is sold on December 31, Year 3 for $13,000, the journal entry to record the sale will include: Answer: A debit to loss on sale for $2,625.
The current FUTA tax rate is 0. 8% and SUTA tax rate is 5. 4%. Both taxes are applied to the first $7,000 of an employee’s pay. Assume that an employee earned $8,900. What is the amount of total unemployment taxes the employer must pay on the employee’s wages? Answer:
434. 00 7,000*5. 4% = 378
7000*0. 8% = 56
378 + 56 = 434
FICA taxes include: Answer: Social Security taxes
Liability: Answer: Must sometimes be estimated
If the times interest ratio: Answer: Increase then the risk decreases.
Gross pay is? Answer: Total compensation earned by an employee before any deductions.
A company’s income before interest expense and taxes is $250,000 and its interest expense is $100,000. It’s times interest earned ratio is: Answer: 2. 50 Income before Interest expense and income taxes/Interest Expense 250,000/100,000 = 2. 50
Employee vacation benefits: Answer: are estimated liabilities
The amount of federal income taxes withheld from an employee’s paycheck is determined by: Answer: the amount of the employee’s current earnings for the pay period and number of withholding allowances the employee claims.
Amount received in advance from customers for future products or services: Answer: are liabilities
A company estimates that a warranty expense will be 4% of sales. The company’s sales for the current period are $185,000. The current period’s entry to record warranty expense is: Answer: Debit warranty expense $7,400; credit estimated warranty liability $7,400 185,000*4% = 7,400 An employee earned 62,500 during the year working for an employer. The FICA tax rate for social security is 6. 2% and the FICA tax rate for Medicare is 1. 45%. The current FUTA tax rate is 0. 8% and SUTA is 5. 4%.
Both unemployment taxes are applied to the first $7,000 of an employee’s pay. What is the total unemployment taxes does the employee have to pay? Answer: $0. 00 Employees do not pay unemployment taxes.
FUTA taxes are: Answer: unemployment taxes Arena Company’s salaried employee’s earned two weeks’ vacation per year. It pays $858,000 in total employee salaries for 52 weeks but its employees work only 50. Record Arena Company’s weekly journal entry to record the vacation expense; Answer: Debit vacation benefits expense $17,160; Credit vacation benefits payable $17,160 858,000/50 = 17,160
A company sells computers at a selling price of $1,800 each. Each computer has a 2-year warranty that covers the replacement of defective parts. It is estimated that 2% of all computers sold will be under the warranty at an average cost of $150 each. During November the company sold 30,000 computers and 400 computers were serviced under the warranty at a total cost of 55,000. The balance is the estimated warranty liability account on November 1 was $29,000. What is the company’s warranty expense for the month of November? Answer: 90,000 (30,000*2%*150) = 90,000
A company had fixed interest expense of $6,000, its income before interest expense and any income taxes is $18,000, and its net income is $8,400. The company’s Times interest earned ratio equals: Answer: 3. 0
Advanced ticket sales totaling $6,000,000 cash would be recognized as follows: Answer: Debit Cash; Credit Unearned Revenue During August, Arena Company sells $356,000 in the product that has a one year warranty. Experience shows that warranty expenses average about 5% of the selling price. The warranty liability account has a balance of $12,800 before adjustment.
Customers returned product for warranty repairs during the month that used $9,400 in parts and repairs. The entry to record customer warranty repairs is: Answer: Debit Estimated Warranty Liability $9,400; credit Parts Inventory $9,400 Obligations not expected to be paid within the length of one year or the company’s operating cycle is reported as: Answer: Long-term liability
Times Interest earned computation is: Answer: (Net Income + Interest expense + Income taxes)/Interest expense The difference between the amount received from issuing a note payable and the amount repaid is referred to as: Answer: Interest
A contingent Liability: Answer: is a potential obligation that depends on a future event arising from a past transaction or event.
In the accounting records of a defendant, lawsuits: Answer: should be recorded if payment for damages is probable and the amount can be reasonably estimated.
A company’s fixed interest expense is $8,000 its income before interest expense and income taxes is $32,000. Its net income is $9,600. The company’s time’s interest earned ratio equals: Answer: 4. 0

Don't use plagiarized sources. Get Your Custom Essay on
Corporation and Partnership
Just from $10/Page
Order Essay
Calculator

Calculate the price of your paper

Total price:$26
Our features

We've got everything to become your favourite writing service

Need a better grade?
We've got you covered.

Order your paper

Order your essay today and save 15% with the discount code ATOM