Question 1

On July 1,2018,Sanchez Company purchased merchandise inventory for $350,000 by signing a note payable.The note is for 6 months and bears interest at a rate of 8%.Prepare the journal entry for this transaction,using a perpetual inventory system.Omit explanation.

Accepted Answer

The answer of On July 1,2018,Sanchez Company purchased merchandise inventory...

Question 2

Extra compensation items that are not paid directly to an employee are called ________.

Accepted Answer

Benefits are extra compensation items that are not paid directly to an employee. Bonuses are typically paid directly to the employee, wages are the regular pay an employee receives, and commissions are typically based on a percentage of sales and are paid directly to the employee.

Question 3

Which of the following is pay over and above base salary,usually paid for exceptional performance?

Accepted Answer

Bonuses are pay over and above base salary, usually paid for exceptional performance. FICA is a mandatory payroll tax, benefits are non-wage compensation such as healthcare and retirement plans, and wages are the amount paid for the work performed.

Question 4

The current portion of long-term notes payable is ________.

Accepted Answer

The current portion of long-term notes payable refers to the amount of principal that is due within the next year. This portion is reclassified from long-term to current liabilities on the balance sheet to accurately reflect obligations that are due in the short term.

Question 5

Peter earns $14.50 per hour for straight time (40 hours),and the company pays him time-and-a-half for overtime.He worked 46 hours at his job during the first week of March 2018.What was Peter's gross pay for the week?

Accepted Answer

Peter's gross pay for the week can be calculated as follows:

Hourly rate for straight time = $14.50
Number of hours worked for straight time = 40
Total straight time pay = Hourly rate x Number of hours worked = $14.50 x 40 = $580

For overtime:
Hourly rate for overtime = $14.50 x 1.5 = $21.75
Number of overtime hours = 46 - 40 = 6
Total overtime pay = Hourly rate x Number of hours worked = $21.75 x 6 = $130.50

Gross pay for the week = Total straight time pay + Total overtime pay = $580 + $130.50 = $710.50

Therefore, the best choice is C, $710.50.

Question 6

Mario worked 48 hours during the work week.He earns wages of $18 per hour for straight time (40 hours).The company pays time-and-half for overtime.Mario's gross pay is $864.

Accepted Answer

(40 hours × $18) + (8 hours × $27) = gross pay
$720 + $216 = $936

Question 7

On December 31,2018,Barry Company borrowed $500,000 by signing a five-year,8% note payable.The note is payable in five yearly installments of $100,000 plus interest,due at the end of every year beginning on December 31,2019.What amount represents the current portion of Long-term Notes Payable at December 31,2018?

Accepted Answer

The answer of On December 31,2018,Barry Company borrowed $500,000 by...

Question 8

A journal entry is prepared to reclassify the current portion of a note payable.

Accepted Answer

No journal entry is needed to reclassify the current portion of a note payable.

Question 9

If a long-term debt is paid in installments,the business will report the current portion of the note payable as a current liability.

Accepted Answer

When a long-term debt is paid in installments, the portion of the debt that is due within one year is reported as a current liability on the balance sheet. This is known as the current portion of the note payable. The remaining portion of the debt that is due after one year is reported as a long-term liability.

Question 10

At the maturity of a note payable,a borrower will pay ________.

Accepted Answer

At the maturity of a note payable, the borrower is required to pay the principal amount borrowed as well as the interest accrued over the borrowing period. Therefore, choice A (the principal plus interest) is the correct answer. The other choices (B, C, and D) do not reflect the full amount owed at maturity.

Question 11

On December 31,2018,Globe Company borrowed $500,000 by signing a five-year,8% note payable.The note is payable in five yearly installments of $100,000 plus interest,due at the end of every year beginning on December 31,2019.Which portion is classified as the long-term portion of Notes Payable at December 31,2018?

Accepted Answer

The answer of On December 31,2018,Globe Company borrowed $500,000 by...

Question 12

________ is pay stated as a percentage of a sale amount.

Accepted Answer

Commission is pay that is based on a percentage of a sale amount, typically earned by salespeople or other employees who generate revenue for a company. Salaries are fixed amounts paid in regular intervals regardless of performance or revenue generation, while wages are typically hourly or daily rates paid for work performed. Bonuses are additional payments made as a reward for achieving certain goals or milestones.

Question 13

Retirement compensation is a benefit because the employer sets aside money for the employee's future retirement.

Accepted Answer

Retirement compensation is a benefit because it provides financial security for the employee's future retirement. The employer sets aside money into a retirement plan such as a pension or 401(k) to help the employee save for their retirement years.

Question 14

Maywood Company recently signed a $350,000,six-month note on August 22,2019.The interest rate is 7%.How much interest will be due at maturity?

Accepted Answer

$350,000 × 7% × 6/12 = $12,250

Question 15

Benefits are extra compensation items that are not paid directly to an employee.

Accepted Answer

Benefits are additional perks or advantages offered to employees in addition to their wages or salaries. They can include healthcare, retirement plans, stock options, vacation time, or other non-monetary incentives.

Question 16

On October 1,2019,Norway Company borrowed $225,000 by signing a nine-month,8% note payable.Interest was accrued on December 31,2019.Prepare the journal entry on July,1,2020,the date the note was paid.Omit explanation.

Accepted Answer

The answer of On October 1,2019,Norway Company borrowed $225,000 by...

Question 17

On June 30,2019,Development Company purchased merchandise inventory for $500,000 by signing a six-month,8% note payable.Prepare the journal entry for the payment of the note on December 30,2019.Omit explanation.

Accepted Answer

The answer of On June 30,2019,Development Company purchased merchandise inventory...

Question 18

________ is a pay amount stated at an hourly rate.

Accepted Answer

Wage is a pay amount stated at an hourly rate. A salary is a fixed pay amount that is usually expressed on an annual or monthly basis. Commission is a percentage of a sale or transaction, and a bonus is an additional amount of pay given as a reward or incentive.

Question 19

The current portion of notes payable is the amount of the principal that is payable more than one year from the balance sheet date.

Accepted Answer

The current portion of notes payable is the amount of the principal that is payable within one year of the balance sheet date.

Question 20

On September 1,2018,Tri-Cities Company borrowed $125,000 by signing a nine-month,7.2% note payable.Prepare the journal entry to accrue interest expense on December 31,2018.Omit explanation.

Accepted Answer

The answer of On September 1,2018,Tri-Cities Company borrowed $125,000 by...

Quiz 11: Current Liabilities and Payroll