ACCT 2401 Exam 4 Study Guide | Accounting Review, Key Concepts & Practice
Questions
Which of the following would be considered a contingent liability?
pending litigation
warranties payable
salaries payable
federal income tax payable - ✔✔pending litigation
contingent = potential
S&C Roofing had sales on account of $32,500 which were subject to state sales tax of 8%. The
entry to the record the sales would be to: - ✔✔debit accounts receivable, $35,100
credit sales revenue, $32,500
credit sales tax payable, $2,600
During the month, TNT construction paid $900 to settle warranty claims. TNT uses an estimated
warranty account. The journal entry to record the claims payment would have been: -
✔✔debit estimated warranty payable, $900
credit cash, $900
On January 1, Greene Autos signed a $270,000, 8%, 30-year mortgage that requires semiannual
payments of $11,934 on June 30 and December 31 of each year. The journal entry to record the
second semiannual payment would be: - ✔✔debit interest expense, $10,755
debit mortgage payable, $1,179
credit cash, $11,934
, Wolfe Company has a 5-year mortgage for $120,000 which requires 4 equal payments of
principal plus interest. In the first year of the mortgage, Wolfe will report this liability as a: -
✔✔current liability of $30,000 and a long-term liability of $90,000
Stella Corp. has the following liabilities: $50,000 salaries payable, $55,000 accounts payable,
$130,000 notes payable (to be made in 10 equal annual payments), and warranty payable
$36,000 (all of Stella's products come with a 90-day manufacturer warranty). The total current
liabilities is: - ✔✔$154,000
50000 + 55000 + 36000 + (130000/10) = 154000
S&C Roofing had sales on account of $29,500 which were subject to state sales tax of 8%. The
entry to record the sales would be to: - ✔✔debit accounts receivable, $31,860
credit sales revenue, $29,500
credit sales tax payable, $2,360
A company signs a note payable for $6,000 at 9% for 70 days. How much interest will the
company owe using a 360-day year? - ✔✔$105.00
6000 x 0.09 x (70/360) = 105
You just purchased a new cell phone, which comes with a manufacturer's warranty of one year.
The company that manufacturers the cell phone would record the warranty as a(n): -
✔✔estimated liability
A $50,000 bond issue with a states interest rate of 15%, when the market rate of interest is 3%,
means that the bond will sell for - ✔✔more than $50,000
Questions
Which of the following would be considered a contingent liability?
pending litigation
warranties payable
salaries payable
federal income tax payable - ✔✔pending litigation
contingent = potential
S&C Roofing had sales on account of $32,500 which were subject to state sales tax of 8%. The
entry to the record the sales would be to: - ✔✔debit accounts receivable, $35,100
credit sales revenue, $32,500
credit sales tax payable, $2,600
During the month, TNT construction paid $900 to settle warranty claims. TNT uses an estimated
warranty account. The journal entry to record the claims payment would have been: -
✔✔debit estimated warranty payable, $900
credit cash, $900
On January 1, Greene Autos signed a $270,000, 8%, 30-year mortgage that requires semiannual
payments of $11,934 on June 30 and December 31 of each year. The journal entry to record the
second semiannual payment would be: - ✔✔debit interest expense, $10,755
debit mortgage payable, $1,179
credit cash, $11,934
, Wolfe Company has a 5-year mortgage for $120,000 which requires 4 equal payments of
principal plus interest. In the first year of the mortgage, Wolfe will report this liability as a: -
✔✔current liability of $30,000 and a long-term liability of $90,000
Stella Corp. has the following liabilities: $50,000 salaries payable, $55,000 accounts payable,
$130,000 notes payable (to be made in 10 equal annual payments), and warranty payable
$36,000 (all of Stella's products come with a 90-day manufacturer warranty). The total current
liabilities is: - ✔✔$154,000
50000 + 55000 + 36000 + (130000/10) = 154000
S&C Roofing had sales on account of $29,500 which were subject to state sales tax of 8%. The
entry to record the sales would be to: - ✔✔debit accounts receivable, $31,860
credit sales revenue, $29,500
credit sales tax payable, $2,360
A company signs a note payable for $6,000 at 9% for 70 days. How much interest will the
company owe using a 360-day year? - ✔✔$105.00
6000 x 0.09 x (70/360) = 105
You just purchased a new cell phone, which comes with a manufacturer's warranty of one year.
The company that manufacturers the cell phone would record the warranty as a(n): -
✔✔estimated liability
A $50,000 bond issue with a states interest rate of 15%, when the market rate of interest is 3%,
means that the bond will sell for - ✔✔more than $50,000
