17. A company reports total sales, including sales taxes, of S3,500,000. If the
ID: 2339313 • Letter: 1
Question
17. A company reports total sales, including sales taxes, of S3,500,000. If the sales tax rate is 7%, how much of the sales amount represents sales tax payable? (a) 233,667 (b) 228,972. (c) 245,000. (d) $3,255,000. A company estimated that its property tax expense for the calendar year would be $26,000. It accrued the appropriate expense and liability amounts each month for six months. On July 1, the company received the actual property tax bill which indicated that its property taxes for the year would be S25,000. What entry should be made on July 1 to adjust the balances in the accounts based upon the actual property tax bill? (a) Property Tax Expense 18. 500 500 2,083 Property Tax Liability Property Tax Liability 500 500 2,083 (b) Property Tax Expense Property Tax Expense (c) Property Tax Liability No entry is required because the expense and liability accounts are properly stated. (d) Use the following information to answer Questions 19 through 21. A company purchases equipment by issuing a S150,000 long term note payable bearing a 3% annual interest rate. The date of issuance was January 2, 200 at which time the market interest rate for similar debt was 10%. Interest is due on December 31 of each year. The principal is due on January 2, 20x4. At what amount should the equipment be recorded on January 2, 20X0? (a) $102,452. (b) $150,000. (c) $116,716. (d) $133,273. 19.Explanation / Answer
17.
Sales tax payable = Gross sales * 7% / 107% = ($3,500,000*7%)/107% = $228,971.96
Hence, correct answer is (b) $228,972
18.
Correct answer is (b)
Out of $26,000 initial estimate, $13,000 has already been accounted as expense and liability during first six months. The six months expense and liability as per actual bill should be $12,500 ($25,000/2). The excess expense and liability of $500 has to be reversed.
19.
Correct answer is (b) $150,000
The equipment shall be recorded at the purchase price of $150,000 by crediting the long term note by the fair value of note.
18.
Interest expense = $115,000 * 10% = $11,500
Correct answer is (a) $11,500
19.
Discount reported on issue of note = $150,000 - $115,000 = $35,000
Interest paid = $150,000 * 3% = $4,500
Discount on notes payable amortised = $11,500 - $4,500 = $7,000
Discount reported on December 31, 20X0 = $35,000 - $7,000 = $28,000
Correct answer is (d) $28,000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.