Question

1. Financial information for International Aero Engine is presented below:

Operating Expenses	$60,000
Sales Revenue	225,000
Cost of Goods Sold	135,000
Gain on sale of airplane	12,500

The gross profit rate for International Aero Engine is

a) 0.455

b) 0.400

c) 0.600

d) 0.155

2. Linton Company does not ring sales taxes separately on the cash register. Total receipts for February amounted to $17,160. If the sales tax rate is 4% what amount must be remitted to the state for February's sales taxes?

a) cannot be determined

b) $660.00

c) $160.00

d) $686.40

3. SuperWinch Company received proceeds of $188,000 on 10-year, 6% bonds issued on January 1, 2018. The bonds had a face value of $200,000 and pay interest annually on January 1. SuperWinch uses the straight-line method of amortization and has a December 31year-end. The adjusting entry on December 31, 2018 for SuperWinch Company will be:

a) Interest expense 12,000

Interest payable 12,000

b) Discount on bonds 1,200

Interest payable 13,200

Interest expense 13,200

c) Discount on bonds 1,200

Interest Payable 12,000

Interest expense 10,800

d) Premium bonds   1,200

Interest Payable 12,000

Answer 1