FINANCIAL ACCOUNTING: PAYROLL,
BONDS, STOCK, AND FINANCIAL
STATEMENTS. EXAM QUESTIONS AND
ANSWERS 100% PASS
What is the formula to calculate net pay from gross wages? - ANS Net pay = Gross wages -
(FIT + FICA-OASDI + FICA-Medicare + State tax + Voluntary deductions)
What is the journal entry to record Salaries and Wages Expense with a gross wage of $10,000? -
ANS Debit: Salaries and Wages Expense $10,000; Credit: Federal Income Tax Payable $1,200;
Credit: FICA-OASDI Payable $620; Credit: FICA-Medicare Payable $145; Credit: State Income Tax
Payable $200; Credit: Voluntary Deductions Payable $300; Credit: Cash or Salaries Payable
$7,535.
What is the journal entry for employer payroll tax expense? - ANS Debit: Payroll Tax Expense
$1,017; Credit: FICA-OASDI Payable $620; Credit: FICA-Medicare Payable $145; Credit: FUTA
Payable $42; Credit: SUTA Payable $210.
How is interest on a note calculated? - ANS Interest = Principal × Annual Rate × Time (in
years).
What is the journal entry to record accrued interest for a $50,000 note at 6% for 3 months? -
ANS Debit: Interest Expense $750; Credit: Interest Payable $750.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, What is the journal entry for paying previously accrued interest? - ANS Debit: Interest
Payable $750; Credit: Cash $750.
What is the journal entry for repaying a note at maturity? - ANS Debit: Notes Payable
$50,000; Debit: Interest Expense (or Interest Payable) $1,500; Credit: Cash $51,500.
What is the journal entry to record sales tax payable when merchandise is sold for $1,000 with a
7% sales tax? - ANS Debit: Cash (or AR) $1,070; Credit: Sales Revenue $1,000; Credit: Sales
Tax Payable $70.
What is the journal entry for deferred (unearned) revenue when cash is received in advance? -
ANS Debit: Cash $2,400; Credit: Unearned Revenue $2,400.
How is revenue recognized from unearned revenue monthly? - ANS Debit: Unearned
Revenue $200; Credit: Service Revenue $200.
What are the terms of a bond? - ANS Face value (principal), maturity date (when principal is
due), and stated interest rate (used to compute cash interest payments).
What is a bond discount? - ANS When bonds are issued at less than face value because the
market rate is greater than the stated rate.
What is a bond premium? - ANS When bonds are issued above face value because the
market rate is less than the stated rate.
What is the journal entry to issue bonds at face value? - ANS Debit: Cash $100,000; Credit:
Bonds Payable $100,000.
What is the journal entry to issue bonds at a premium? - ANS Debit: Cash $107,000; Credit:
Bonds Payable $100,000; Credit: Premium on Bonds Payable $7,000.
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
BONDS, STOCK, AND FINANCIAL
STATEMENTS. EXAM QUESTIONS AND
ANSWERS 100% PASS
What is the formula to calculate net pay from gross wages? - ANS Net pay = Gross wages -
(FIT + FICA-OASDI + FICA-Medicare + State tax + Voluntary deductions)
What is the journal entry to record Salaries and Wages Expense with a gross wage of $10,000? -
ANS Debit: Salaries and Wages Expense $10,000; Credit: Federal Income Tax Payable $1,200;
Credit: FICA-OASDI Payable $620; Credit: FICA-Medicare Payable $145; Credit: State Income Tax
Payable $200; Credit: Voluntary Deductions Payable $300; Credit: Cash or Salaries Payable
$7,535.
What is the journal entry for employer payroll tax expense? - ANS Debit: Payroll Tax Expense
$1,017; Credit: FICA-OASDI Payable $620; Credit: FICA-Medicare Payable $145; Credit: FUTA
Payable $42; Credit: SUTA Payable $210.
How is interest on a note calculated? - ANS Interest = Principal × Annual Rate × Time (in
years).
What is the journal entry to record accrued interest for a $50,000 note at 6% for 3 months? -
ANS Debit: Interest Expense $750; Credit: Interest Payable $750.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, What is the journal entry for paying previously accrued interest? - ANS Debit: Interest
Payable $750; Credit: Cash $750.
What is the journal entry for repaying a note at maturity? - ANS Debit: Notes Payable
$50,000; Debit: Interest Expense (or Interest Payable) $1,500; Credit: Cash $51,500.
What is the journal entry to record sales tax payable when merchandise is sold for $1,000 with a
7% sales tax? - ANS Debit: Cash (or AR) $1,070; Credit: Sales Revenue $1,000; Credit: Sales
Tax Payable $70.
What is the journal entry for deferred (unearned) revenue when cash is received in advance? -
ANS Debit: Cash $2,400; Credit: Unearned Revenue $2,400.
How is revenue recognized from unearned revenue monthly? - ANS Debit: Unearned
Revenue $200; Credit: Service Revenue $200.
What are the terms of a bond? - ANS Face value (principal), maturity date (when principal is
due), and stated interest rate (used to compute cash interest payments).
What is a bond discount? - ANS When bonds are issued at less than face value because the
market rate is greater than the stated rate.
What is a bond premium? - ANS When bonds are issued above face value because the
market rate is less than the stated rate.
What is the journal entry to issue bonds at face value? - ANS Debit: Cash $100,000; Credit:
Bonds Payable $100,000.
What is the journal entry to issue bonds at a premium? - ANS Debit: Cash $107,000; Credit:
Bonds Payable $100,000; Credit: Premium on Bonds Payable $7,000.
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
