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Payroll Tax, Gain on Bonds, EPS, Retained Earnings, & PE Ratio

Question 1
Phildell Phoenix is paid on a monthly basis. For the month of January of the current year, he earned a total of $8,288. FICA tax for social security is 6.2% and the FICA tax for Medicare is 1.45%. The FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The amount of Federal Income Tax withheld from his earnings was $1,375.17. What is the amount of the employer's payroll taxes liabilities?

a. $ 56.00
b. $ 120.18
c. $ 378.00
d. $1,068.04

Question 2
A company has bonds outstanding with a par value of $100,000. The unamortized discount on these bonds is $4,500. The company retired these bonds by buying them on the open market at 97. What is the gain or loss on this retirement?

a. $0 gain or loss.
b. $1,500 gain.
c. $1,500 loss.
d. $3,000 gain.

Question 3
Shamrock Company had net income of $30,000. On January 1, the number of shares of common stock outstanding was 8,000. On April 1, the company issued an additional 2,000 shares of common stock. There were no other stock transactions. The company's earnings per share are:

a. $3.75.
b. $3.00.
c. $3.33.
d. $3.16.

Question 4
A company had a beginning balance in retained earnings of $43,000. It had net income of $6,000 and paid out cash dividends of $5,625 in the current period. The ending balance in retained earnings equals:

a. $108,625.
b. $ (12,625).
c. $ 11,375.
d. $ 43,375.

Question 5
A company has net income of $850,000. It has 125,000 weighted-average common shares outstanding and a market value per share of $115. The company's price-earnings ratio equals:

a. 16.9.
b. 14.7.
c. 92.0.
d. 13.5.

Question 6
A company issued 60 shares of $100 par value stock for $7,000 cash. The total amount of contributed capital is:

a. $ 100.
b. $ 600.
c. $1,000.
d. $7,000.

Question 7
Doherty Corporation had net income of $30,000, net sales of $1,000,000, and average total assets of $500,000. Its return on total assets is:

a. 3%
b. 200%
c. 6%
d. 17%

Question 8
If the exchange rate for Canadian and U.S. dollars is 0.82777 to 1, this implies that 3 Canadian dollars will buy ____ worth of U.S. dollars.

a. $ 0.2759
b. $0.82777
c. $1.82777
d. $2.48

Question 9
A company owns $100,000 of 9% bonds that pay interest on October 1 and April 1. The amount of interest accrued on December 31 (the company's year-end) would be:

a. $ 750.
b. $1,500.
c. $2,250.
d. $4,500.

Solution Summary

The solution explains various multiple choice questions relating to payroll tax, gain on bonds, EPS, retained earnings, PE ratio and return on assets