Acct 551 Final Exam (Questions with Answers)

ACCT 551 Final Exam (Questions With Answers)

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ACCT 551 Final Exam (Questions With Answers)


1. (TCO C) Redstone Company spent $190,000 developing a new process, $45,000 in legal fees to obtain a patent, and $91,000 to market the process that was patented. How should these costs be accounted for in the year they are incurred?

2. (TCO D) Total payroll of Watson Co. was $920,000, of which $160,000 represented amounts paid in excess of $100,000 to certain employees. The amount paid to employees in excess of $7,000 was $720,000. Income taxes withheld were $225,000. The state unemployment tax is 1.2%, the federal unemployment tax is .8%, and the F.I.C.A. tax is 7.65% on an employee’s wages to $100,000 and 1.45% in excess of $100,000.
(a) Prepare the journal entry for the wages and salaries paid.
(b) Prepare the entry to record the employer payroll taxes.


3. (TCO D). Prepare journal entries to record the following retirement.   (Show computations and round to the nearest dollar.)
The December 31, 2010 balance sheet of Wolfe Co. included the following items:
7.5% bonds payable due December 31, 2018     $1,200,000
Unamortized discount on bonds payable             48,000
The bonds were issued on December 31, 2008 at 95, with interest payable on June 30 and December 31.   (Use straight-line amortization.)
On April 1, 2011, Wolfe retired $240,000 of these bonds at 101 plus accrued interest.

4. (TCO E) Parker Corporation has issued 2,000 shares of common stock and 400 shares of preferred stock for a lump sum of $72,000 cash.
Instructions
(a) Give the entry for the issuance assuming the par value of the common was $5 and the market value $30, and the par value of the preferred was $40 and the market value $50. (Each valuation is on a per share basis and there are ready markets for each stock.)
(b) Give the entry for the issuance assuming the same facts as (a) above...