ACCT110 – Accounting Principles 1 Fi nal Exam: Part I & II – This assessment is
ID: 2501983 • Letter: A
Question
ACCT110
–
Accounting Principles 1
Fi
nal Exam: Part I & II
–
This assessment is worth 15% of your overall grade.
Completing this assessment will help to:
Course Outcomes:
Recognize the importance of accounting ethics and interpersonal skills
when resolving accounting issues.
Create and analyze basic financial statements using computerization.
Develop and evaluate cash control operations including bank
reconciliation and petty cash.
Construct a complete accounting cycle including the analysis, recording
process from source documents, transaction summary, through post
-
closing trial balance for a
service business using computerization.
Program Outcome
s:
Record and report financial information using Generally Accepted
Accounting Principles (GAAP).
Integrate theory, knowledge and technology to interpret financial and
non
-
financial information to aid decision makers within an organization
Institutional Outcomes
:
Relational Learning
: Transfer knowledge, skills and behaviors acquired
through formal and informal learning and life experiences to new
situations.
Thinking Abilities
:
Employ strategies
for reflection on learning and
practice in order to adjust learning processes for continual improvement.
Quantitative and Scientific Reasoning
: Follow established methods of
inquiry and mathematical reasoning to form conclusions and make
decisions.
Deadline
:
Due
by
the end of week 7.5
11:59
pm
,
ET
.
Par II Directions
: the assessment contains 25 questions. It is untimed and you
have one attempt.
Part I
Directions
:
Payroll is usually the largest expense of a business. It is very important to know
what
taxes to withhold and when they need to be paid. It is also very important
to be able to record payroll transactions correctly.
This assessment assesses your ability to determine which taxes to withhold and
how to record them correctly in your company bo
oks.
1. Payroll Problem
75 points
Guides Co. has four employees. FICA
Social Security
taxes are
6.2% of the first
$110,100 paid to each employee, and FICA Medicare taxes are1.45% of gross pay.
Also, for the first $7,000 to each employee the company’s FUTA taxes are 0.8%
and SUTA taxes are 1.75%. The company is preparing its payroll calculations for
the week ended September 30. Payroll Records show the following for the
company’s four employees.
Gross Pay
Current pay
Name
Through 9/23
Gross
Pay
Income Tax
Withholding
State Tax
Withholding
Ahmed
$108,500
$2,500
$198
$50
Carlos
36,650
1.515
182
45
June
6,650
475
32
10
Marie
22,200
1,000
68
23
In addition to gross pay, the company must pay one
-
half of the $50 per employee
weekly
health insurance
;
each employee pays the remaining one
-
half
. The
company also contributes an extra 5% of each employee’s gross pay (at no cost to
employees) to a pension fund.
Employees also paid 6.88 per week in union dues
with the exception of Ahmed sin
ce he is a supervisor.
Required:
Compute the following for the week ended September 30 (round amounts to the
nearest cent).
1.
Each employee’s FICA withholdings for Social Security.
2.
Each employee’s FICA withholding for Medicare.
3.
Employer’s FICA taxes for
Social Security.
4.
Employer’s FICA taxes for Medicare.
5.
Employer’s FUTA taxes.
6.
Employer’s SUTA taxes.
7.
Each employee’s net (take
-
home) pay.
8.
Employer’s total payroll
-
related expense for each employee.
2.
Bank Reconciliation
25 points
Wright Company deposits
all cash receipts on the day when they are received
and it makes all cash payments by check. At the close of business on May 31,
2013, its Cash account shows a $27,5
00 debit balance. The company
May
’
s
bank
statement shows $25,800 on deposit in the bank.
a)
The May 31 bank statement included a $100 debit memorandum for bank
services; the company has not yet recorded the cost of these services.
b)
Outstanding checks as of May 31 total $5,600.
c)
May 31 cash receipts of $6,200 were placed in the bank’s night deposit
ory
after banking hours and were not recorded on the May 31 bank statement.
d)
In reviewing the bank statement, a $400 check written by Smith Company
was mistakenly drawn against Wright’s account.
e)
A debit Memorandum for $600 refers to a $600 NSF check from a
customer; the company has not yet recorded this NSF check.
Prepare a bank reconciliation for the company using the above information.
Explanation / Answer
Recognizing the importance of accounting ethics and interpersonal skills while resolving accounting issues:
1. Stakeholders of a company like shareholders, banks, lenders, and suppliers are interested with the information provided in yearly accounting statements. Their interest must be protected on ethical ground. If someone is doing any wrong thing like treating a capital expenditure as a recurring expense for minimizing profit, should be stopped immediately. A strong interpersonal skill is required to make it understandable to the offender.
2. Ethics are important for removing right-or-wrong dilemmas. Ethic teaches why a right journal entry or ledger posting is required instead of wrong accounting. It builds moral power. On the other hand interpersonal skill is required for resolving any complicated accounting issue. Suppose an auditor is explaining his thought to the accountant regarding cash disbursements.
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