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On january 1 2004 foley co sold 12 bonds with a face value

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Reference no: EM13486035

1.Which of the following is not a permissible method of calculating a bonus to an employee?

a. The bonus is based on income before deductions for the bonus and income taxes.

b. The bonus is based on income after deduction of the bonus but before deduction of income taxes.

c. The bonus is based on income after deductions for the bonus and income taxes.

d. All of these are permissible.

2.The total payroll of Waters Company for the month of October, 2004 was $480,000, of which $120,000 represented amounts paid in excess of $84,900 to certain employees. $400,000 represented amounts paid to employees in excess of the $7,000 maximum subject to unemployment taxes. $120,000 of federal income taxes and $12,000 of union dues were withheld. The state unemployment tax is 1%, the federal unemployment tax is .8%, and the current F.I.C.A. tax is 7.65% on an employee's wages to $84,900 and 1.45% in excess of $84,900. What amount should Waters record as payroll tax expense?

a. $158,160.

b. $150,720.

c. $30,720.

d. $37,920.

3.Use the following information for questions the next two questions:

Norris Co. has a contract with its president to pay her a 5% bonus for 2004 and 2005. The federal income tax rate is 30% during these two years.

In 2004, income before deductions for the bonus and federal income taxes was $400,000. If the bonus is based on income

before deduction of the bonus but after deduction of income tax, the bonus (to the nearest dollar) is

a. $13,793.

b. $14,000.

c. $14,221.

d. $20,000.

4.In 2005, income before deductions for the bonus and federal income taxes was $600,000. If the bonus is based on income after deductions for the bonus and income tax, the bonus (to the nearest dollar) is

a. $19,719.

b. $20,000.

c. $20,290.

d. $30,000.

5.Discount on Notes Payable is charged to interest expense

a. equally over the life of the note.

b. only in the year the note is issued.

c. using the effective interest method.

d. only in the year the note matures.

6.On January 1, 2004, Foley Co. sold 12% bonds with a face value of $1,000,000. The bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for $1,077,000 to yield 10%. Using the effective interest method of amortization, interest expense for 2004 is

a. $100,000.

b. $107,392.

c. $107,700.

d. $120,000.

7.On January 2, 2004, a calendar-year corporation sold 8% bonds with a face value of $1,500,000. These bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for $1,384,000 to yield 10%. Using the effective interest method of computing interest, how much should be charged to interest expense in 2004?

a. $120,000.

b. $138,400.

c. $138,860.

d. $150,000

Reference no: EM13486035

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