Describe the major controls for cash payments.
> What is EFTPS? When is EFTPS required?
> What does “semiweekly” refer to in the Semiweekly Deposit Schedule Rule?
> What does “monthly” refer to in the Monthly Deposit Schedule Rule?
> Why was the unemployment insurance system established?
> What is the purpose of allowing a credit against the FUTA for state unemployment taxes?
> What is the purpose of Form 940? How often is it filed?
> A state charges a basic SUTA tax rate of 5.4 percent. Because of an excellent experience rating, an employer in the state has to pay only 1.0 percent of the taxable payroll as state tax. What is the percentage to be used in computing the credit against t
> 1. You are a member of Arrow Company’s internal audit staff. A review of office practices indicates that an accounting assistant routinely makes arrangements with the bank for short-term notes payable and signs the notes. Evaluate this
> Is the employer required to deposit the federal unemployment tax during the year? Explain.
> What is Form 941? How often is the form filed?
> Who pays for workers’ compensation insurance?
> When is the premium for workers’ compensation insurance usually paid?
> How can an employer keep informed about changes in the rates and bases for the social security, Medicare, and FUTA taxes?
> What happens if the employer fails to deduct enough employee income tax or FICA tax from employee earnings?
> Which of the following are withheld from employees’ earnings? a. FUTA b. income tax c. Medicare d. social security e. SUTA f. workers’ compensation
> What is the purpose of the Medicare tax?
> How are earnings determined when employees are paid on the hourly rate basis?
> Give two examples of common payroll fraud.
> 1. Why would managers use the allowance method for recording uncollectible accounts instead of the direct charge-off method? 2. Should the sales department be given final authority for approving credit applications? Why? 3. Why is an account receivable t
> Does the employee bear any part of the SUTA tax? Explain.
> How are the federal and state unemployment taxes related?
> What is an exempt employee?
> What aspects of employment are regulated by the Fair Labor Standards Act? What is another commonly used name for this act?
> What factors affect how much federal income tax must be withheld from an employee’s earnings?
> How does the salary basis differ from the hourly rate basis of paying employees?
> What publication of the Internal Revenue Service provides information about the current federal income tax rates and the procedures that employers should use to withhold federal income tax from an employee’s earnings?
> What is the simplest method for finding the amount of federal income tax to be deducted from an employee’s gross pay?
> What are the four bases for determining employee gross earnings?
> How does the direct deposit method of paying employees operate?
> 1. A new manager of a retail company suggests that the company should prepare its income statement on the basis of cash receipts and cash expenditures (except for the acquisition of fixed assets, such as plant and equipment). He argues that managers, inv
> What is the purpose of the social security tax?
> How does the Fair Labor Standards Act affect the wages paid by many firms? What types of firms are regulated by the act?
> Why are MICR numbers printed on deposit slips and checks?
> What type of information is entered on a check stub? Why should a check stub be prepared before the check is written?
> What is a check?
> What information is shown on the bank statement?
> What procedures are used to achieve internal control over banking activities?
> What is the book balance of cash?
> Give some reasons why the bank balance and the book balance of cash might differ.
> What account is credited for a cash discount taken by the purchaser when (a) the periodic system is used and (b) the perpetual system is used?
> 1. Why should management be concerned about the efficiency of the end-of-period procedures? 2. Spectrum Company had an increase in sales and net income during its last fiscal year, but cash decreased and the firm was having difficulty paying its bills by
> What account is debited for freight charges on merchandise inventory purchases when (a) the periodic system is used and (b) the perpetual inventory system is used?
> What account is credited for the return of merchandise inventory when (a) the periodic system is used and (b) the perpetual inventory system is used?
> What account is debited for the purchase of merchandise inventory when (a) the periodic system is used and (b) the perpetual inventory system is used?
> The following statements concern the use of online banking. Identify whether each is true or false. a. Businesses can use online banking to send tax payments to government agencies. b. Businesses can use online banking to send, but not receive, electroni
> Explain the meaning of the following terms: a. Canceled check b. Outstanding check c. Deposit in transit d. Debit memorandum e. Credit memorandum f. Dishonored check g. Blank endorsement h. Deposit slip i. Drawee j. Restrictive endorsement k. Payee l. Dr
> Describe the major controls for cash receipts.
> Explain what bonding means. How does bonding relate to safeguarding cash?
> Why are journal entries sometimes needed after the bank reconciliation is prepared?
> What is a promissory note? What entry is made to record the collection of a promissory note and interest? Which journal is used?
> The president of Tower Copper Company has told you to go out to the factory and count merchandise inventory. He said the stockholders were coming for a meeting next week and he wanted to put on a good show. He asked you to make the inventory a bit heavie
> Why do some wholesale businesses offer cash discounts to their customers?
> How does a wholesale business record a check received on account from a customer when a cash discount is involved? Which journal is used?
> How does a firm record a payment on account to a creditor when a cash discount is involved? Which journal is used?
> What type of account is Purchases Discounts? How is this account presented on the income statement?
> Describe the major controls for petty cash.
> When are petty cash expenditures entered in a firm’s accounting records?
> How are cash shortages and overages recorded?
> Which type of endorsement is most appropriate for a business to use?
> Why is a bank reconciliation prepared?
> The following transactions occurred at several different businesses and are not related. INSTRUCTIONS Analyze each of the transactions. For each transaction, set up T accounts. Record the effects of the transaction in the T accounts. TRANSACTIONS 1. A f
> The accountant for the firm owned by Brian Carter prepares financial statements at the end of each month. INSTRUCTIONS Use the figures in the T accounts for Problem 3.4B to prepare a trial balance, an income statement, a statement of owner’s equity, and
> The equation below shows the transactions of Kathryn Proctor, Attorney and Counselor at Law, during August. This law firm is owned by Kathryn Proctor. INSTRUCTIONS Analyze each transaction carefully. Prepare an income statement and a statement of owner&a
> Rayshanti Williamson is opening a tax preparation service on December 1, which will be called Williamson’s Tax Service. Williamson plans to open the business by depositing $50,000 cash into a business checking account. The following assets will also be o
> Royce Alexander owns Alexander’s Consulting Service. At the beginning of September, his firm’s financial records showed the following assets, liabilities, and owner’s equity. INSTRUCTIONS Set up an eq
> On September 1, Takka Myers opened Takka Myers Tutoring Service. INSTRUCTIONS Analyze the following transactions. Use the fundamental accounting equation form to record the changes in property, claims of creditors, and owner’s equity. (Use plus, minus, a
> Why is it useful for a business to have an accounts payable ledger?
> 1. Carolina Customs recently discovered that a payroll clerk had issued checks to nonexistent employees for several years and cashed the checks himself. The company does not have any internal control procedures for its payroll operations. What specific c
> HiTech Computer Company is currently manufacturing a part that goes into its main product. Each year, 2,000 of these parts are used. Cost data for the past year that relate to the 2.000 parts are given below. Fixed costs are allocated on the basis of dir
> Washington Architectural Manufacturing makes architectural wood products, such as crown molding, onlays, and panels, which it sells to commercial builders. The firm’s finishing department is not mechanized. Employees use hand tools to finish the product.
> Pitt Corporation began operations in 20X1 to manufacture a single product. Relevant data for the year follow. There are no work-in-process inventories. OPERATING DATA FOR 20X1 Quantities: Beginning inventories, finished goods –0– Units produced during th
> The following data pertains to the operations of Eastern Industries for the year ended December 31, 20X1, its first year of operations. Eastern Industries makes kitchen appliances. Round ending inventory computations to the nearest dollar. DATA FOR 20X1
> Milano Leather Goods, Inc., makes one product that is processed through two departments: cutting and accessory. All materials are added in the first department. During the month of January 20X1, 8,000 units of the product were made. Standard costs and ac
> Organic Manufacturing Co. manufactures the product Orgex, which requires three raw materials. Production is in batches of 2,500 pounds of materials. Any waste is thrown away. The firm uses standard costs as a control device. Its standard costs for materi
> Midwest Manufacturing Company makes a single product that requires one hour of labor for each unit. The budgeted output for 20X1 is 36,000 units. Fixed and variable overhead cost data are as follows: INSTRUCTIONS 1. Prepare a flexible budget for Midwest
> The accountant for BioSafe Products, Inc., has compiled the following information about the direct labor hours and utility costs for each month of 20X1: INSTRUCTIONS 1. Compute the monthly fixed costs (rounded to nearest whole dollar) and the variable co
> TX Chemical Company manufactures a pharmaceutical chemical. All materials are put into process at the beginning of production. On April 1, 20X1, 3,000 pounds of the product were in process in the first department. During the month of April, 57,000 pounds
> H20 Inc. has two producing departments—fabricating and assembly. The data below is from the firm’s records for the month of July 20X1. There were no beginning inventories. INSTRUCTIONS 1. In general journal form, recor
> What type of accounts are kept in the accounts payable ledger?
> C8K Company manufactures plastic hats. The monthly production report for October 20X1 follows: INSTRUCTIONS Prepare the equivalent production computations for each department. Analyze: What portion of materials was added in October in the assembly depart
> Custom Cabinet Company builds kitchen cabinets. On November 1, 20X1, two jobs, Job 045 and Job 048, were in progress. The order is from Grace Apartments and was begun on October 5, 20X1. The accumulated costs for each job are detailed as follows: During
> In June 20X1, Red Fab, Inc., had the following cost data: COST DATA a. Raw materials costing $150,000 were purchased. b. Raw materials costing $105,000 were used: direct materials, $100,000; indirect materials, $5,000. c. Factory wages of $100,000 were i
> Holding Inc. makes shipping containers. The Trial Balance section of its worksheet and other yearend data follow. INSTRUCTIONS 1. Prepare a 12-column manufacturing worksheet for the fiscal year ended December 31, 20X1. Enter the trial balance in the firs
> Tebow Manufacturing Company makes camping equipment. Selected account balances (listed alphabetically) for this firm on December 31, 20X1, the end of its fiscal year, are given below. Data about the beginning and ending inventories is also shown. INSTRUC
> Solutions Inc. has three departments: printing, supplies, and cards. Certain information about the revenues and expenses of the departments for the year ending December 31, 20X1, is given below. Indirect expenses have been allocated on bases similar to t
> Selected information from the adjusted trial balance of Woo Books, LLC, as of December 31, 20X1, is shown below: INSTRUCTIONS Prepare a departmental income statement for the year ended December 31, 20X1. The bases for allocating indirect expenses are giv
> The comparative balance sheet for MP, Inc., as of December 31, 2022 and 2021, is shown below, followed by the condensed income statement for 2022. INSTRUCTIONS Prepare a statement of cash flows for 2022. Other financial data for the year follow: a. Sold
> Lee Corporation’s comparative balance sheet as of December 31, 2022 and 2021, and 2022 condensed income statement appear below. INSTRUCTIONS Prepare a statement of cash flows for 2022. Additional information for the year follows: a. Dep
> Postclosing trial balance data and other financial data for Char, Inc., as of December 31, 2022 and 2021, follow. INSTRUCTIONS Prepare a statement of cash flows for 2022. Additional information for the year follows: a. Sold an unused lot for $25,000 in c
> What is the relationship of the Accounts Payable account in the general ledger to the accounts payable subsidiary ledger?
> A comparative balance sheet for U&ME Corporation as of December 31, 2022 and 2021, is given below. INSTRUCTIONS Use these data to prepare a statement of cash flows for 2022. Additional information for the year follows: a. Had net income of $25,100. b
> Condensed financial statements for Alpha Corp. and Omega Corp. for 2022 follow: INSTRUCTIONS 1. Compute the following ratios for each company (rounding to 2 decimal places when appropriate): a. Rate of return on net sales b. Rate of return on total asset
> Using the data from Problem 23.1B, Chevy Hill, Inc., calculate the following financial ratios. Comment on any ratio that merits further consideration. Inventory on December 31, 2021, was $40,000. Please round percentages to nearest 0.1 percent. 1. Curren
> Chevy Hill, Inc., sells vintage clothes. The firm’s comparative income statement and balance sheet for the years 2021 and 2022 follow: INSTRUCTIONS 1. Prepare both a horizontal and a vertical analysis of the two statements. Round all ca
> On April 1, 2022, Big Sky Corporation issued $400,000 face value, 10 percent bonds at 99.16. The bonds were dated April 1, 2022, and will mature in 10 years. The discount is to be amortized on each interest payment date. The interest is payable semiannua
> TV Products, Inc., has outstanding $400,000 face value, 5 percent bonds payable dated January 1, 2022, and maturing 10 years later. The corporation is required under the bond contract to transfer $36,000 each year to a sinking fund. The directors have al
> The board of directors of Amora Company authorized issuance of $1,000,000 of 6 percent bonds. Each bond has a face value of $10,000. The interest is payable semiannually on February 1 and August 1. The bonds are dated February 1, 2022, and mature 10 year
> The board of directors of CAR Corporation authorized the issuance of $1,000,000 face value, 6 percent bonds. The bonds mature 10 years from their issue date of March 1, 2022. The interest is payable semiannually on March 1 and September 1. Because the fu
> The board of directors of Bow Products, Inc., authorized the issuance of $1,000,000 face value, 5 percent bonds dated April 1, 2022. The bonds will mature on April 1, 2032. The interest is payable semiannually on April 1 and October 1. The bond transacti
> The Stockholders’ Equity section of Austin Corporation’s balance sheet on January 1, 20X1, follows, along with selected transactions for the year: INSTRUCTIONS 1. Set up general ledger accounts for the stockholders&aci
