On July 1, 2021, a company sells $2,000 of gift cards to customers. The gift cards expire one year from the date of sale

On July 1, 2021, a company sells $2,000 of gift cards to customers. The gift cards expire one year from the date of sale. By December 31, 2021, $1,600 of the gift cards have been redeemed. What is the appropriate balance in the Deferred Revenue account on December 31, 2021?

A) $2,000.

B) $1,800.

C) $1,600.

D) $400.

Answer: D

On October 1, 2021, a company sells $800 of gift cards to customers. The gift cards expire one year from the date of sale. By October 1, 2022, $750 of the gift cards have been redeemed and the sales recorded at the time of redemption. What entry, if any, should the company record on October 1, 2022?

A) Debit Deferred Revenue, $50 credit Sales Revenue, $50.

B) Debit Sales Revenue, $50 credit Cash, $50.

C) Debit Cash, $750 credit Sales Revenue, $750.

D) No journal entry is necessary.

Answer: A

Sales taxes collected by a company on behalf of the state and local governments are recorded by:

A) A debit to an expense account.

B) A credit to a revenue account.

C) A debit to a revenue account.

D) A credit to a liability account.

Answer: D

On March 31, 2021, a company sells $1,200 of gift cards to customers. The gift cards expire one year from the date of sale

On March 31, 2021, a company sells $1,200 of gift cards to customers. The gift cards expire one year from the date of sale. What entry should the company record on March 31, 2021?

A) Debit Cash, $1,200 credit Sales Revenue, $1,200.

B) Debit Sales Revenue, $1,200 credit Cash, $1,200.

C) Debit Cash, $1,200 credit Deferred Revenue, $1,200.

D) No journal entry is necessary.

Answer: C

Gift card breakage refers to:

A) The inability of the company to satisfy its obligation to customers that have previously purchased gift cards.

B) The point in time when gift cards expire or when the likelihood of redemption by customers is viewed as remote.

C) The time at which customers redeem their previously purchased gift cards for goods and services.

D) Companies selling gift cards to customers on account and then those customers failing to pay the amount owed.

Answer: B

When a company delivers a product or service for which a customer has previously paid, the company records the following:

A) A debit to a revenue account and a credit to a liability account.

B) A debit to a revenue account and a credit to an asset account.

C) A debit to an asset account and a credit to a revenue account.

D) A debit to a liability account and a credit to a revenue account.

Answer: D

In January, 2021, Summit Department Store sells a gift card for $50 and receives cash. In February, 2021, the customer comes back and spends $20

In January, 2021, Summit Department Store sells a gift card for $50 and receives cash. In February, 2021, the customer comes back and spends $20 of the gift card to purchase a water bottle. What would be the appropriate journal entry for the customer's purchase of the water bottle in February?

A) Debit Deferred Revenue, $50 credit Sales Revenue, $50.

B) Debit Deferred Revenue, $20 credit Sales Revenue, $20.

C) Debit Sales Revenue, $20 credit Deferred Revenue, $20.

D) No journal entry is necessary.

Answer: B

At times, businesses require advance payments from customers that will be applied to the purchase price when goods are delivered or services provided. These customer advances represent:

A) Liabilities until the product or service is provided.

B) A component of stockholders' equity.

C) Long-term assets until the product or service is provided.

D) Revenue upon receipt of the advance payment.

Answer: A

The sale of gift cards by a company is a direct example of:

A) Deferred revenues.

B) Sales tax payable.

C) Current portion of long-term debt.

D) Contingencies.

Answer: A

In December 2020, Quebecor Printing received magazine subscriptions for 2021 from customers, who paid $500 in cash

In December 2020, Quebecor Printing received magazine subscriptions for 2021 from customers, who paid $500 in cash. What would be the appropriate journal entry for this event in December 2020?

A) Debit Cash, $500 credit Subscription Revenue, $500.

B) Debit Cash, $500 credit Deferred Revenue, $500.

C) Debit Subscription Revenue, $500 credit Cash, $500.

D) No journal entry is necessary.

Answer: B

In January 2021, Summit Department Store sells a gift card for $50 and receives cash. In February, 2021, the customer comes back and spends $20 of the gift card to purchase a water bottle. What would be the appropriate journal entry for the sale of the gift card in January?

A) Debit Cash, $50 credit Sales Revenue, $50.

B) Debit Cash, $50 credit Deferred Revenue, $50.

C) Debit Sales Revenue, $20 credit Cash, $20.

D) No journal entry is necessary.

Answer: B

Deferred Revenues is a(n):

A) Liability account.

B) Asset account.

C) Stockholders' equity account.

D) Revenue account.

Answer: A

Rock Adventures has 15 employees each working 40 hours per week and earning $30 an hour. Federal income taxes are withheld at 15%

Rock Adventures has 15 employees each working 40 hours per week and earning $30 an hour. Federal income taxes are withheld at 15% and state income taxes at 6%. FICA taxes are 7.65% and unemployment taxes are 3.8% of the first $7,000 earned per employee. What is the employer's total payroll tax expense for the first week of January?

A) $1,377.

B) $3,141.

C) $2,061.

D) $684.

Answer: C

Rock Adventures has 15 employees each working 40 hours per week and earning $30 an hour. Federal income taxes are withheld at 15% and state income taxes at 6%. FICA taxes are 7.65% and unemployment taxes are 3.8% of the first $7,000 earned per employee. What is the actual payroll payment (salaries payable) for the first week of January?

A) $13,923.

B) $12,843.

C) $5,157.

D) $18,000.

Answer: B

Action Travel has 10 employees each working 40 hours per week and earning $20 an hour. Federal income taxes are withheld at 15% and state income taxes at 6%. FICA taxes are 7.65% and unemployment taxes are 3.8% of the first $7,000 earned per employee. What is the employer's total payroll tax expense for the first week of January?

A) $612.

B) $1,224.

C) $916.

D) $304.

Answer: C

Greger Peterson is a senior manager at a public accounting firm making a base salary of $180,000 a year ($15,000 per month)

Greger Peterson is a senior manager at a public accounting firm making a base salary of $180,000 a year ($15,000 per month). Employers are required to withhold a 6.2% Social Security tax up to a maximum base amount and a 1.45% Medicare tax with no maximum. Assuming the Social Security maximum base amount is $128,400, through what month will Social Security be withheld?

A) Social Security will be withheld through the month of September.

B) Social Security will be withheld through the entire year.

C) Social Security will be withheld through the month of January.

D) Social Security will be withheld through the month of October.

Answer: A

Greger Peterson is a senior manager at a public accounting firm making a base salary of $180,000 a year ($15,000 per month). Employers are required to withhold a 6.2% Social Security tax up to a maximum base amount and a 1.45% Medicare tax with no maximum. Assuming the Social Security maximum base amount is $128,400, how much will be withheld during the year for Peterson's Social Security and Medicare taxes. (Round your answers to the nearest dollar amount.)

A) $2,610.

B) $10,571.

C) $13,770.

D) None of the other answer choices are correct.

Answer: B

Action Travel has 10 employees each working 40 hours per week and earning $20 an hour. Federal income taxes are withheld at 15% and state income taxes at 6%. FICA taxes are 7.65% and unemployment taxes are 3.8% of the first $7,000 earned per employee. What is the actual payroll payment (Salaries Payable) for the first week of January?

A) $5,404.

B) $5,708.

C) $4,792.

D) $8,000.

Answer: B

Suppose a college football coach makes a base salary of $2,400,000 a year ($200,000 per month). Employers are required to withhold a 6.2% Social Security tax up to a maximum base amount and a 1.45% Medicare tax with no maximum. Assuming the Social Security maximum base amount is $128,400, through what month will Social Security be withheld?

A) Social Security will be withheld only in January.

B) Social Security will be withheld through the entire year.

C) Social Security will be withheld through the month of March.

D) Social Security will be withheld through the month of June.

Answer: A

Suppose a college football coach makes a base salary of $2,400,000 a year ($200,000 per month). Employers are required to withhold a 6.2% Social Security tax up to a maximum base amount and a 1.45% Medicare tax with no maximum. Assuming the Social Security maximum base amount is $128,400, how much will be withheld during the year for the coach's Social Security and Medicare taxes? (Round your answers to the nearest dollar amount.)

A) $34,800.

B) $42,761.

C) $183,600.

D) None of the other answer choices are correct.

Answer: B

Which of the following are included in an employer's payroll tax expense?

A) Employer portion of FICA taxes.

B) Federal unemployment taxes.

C) State unemployment taxes.

D) All of the other answer choices are correct.

Answer: D