Exercise 9-4 Interest-bearing notes payable with year-end adjustments 

Exercise 9-4 Interest-bearing notes payable with year-end adjustments 

Keesha Co. borrows $255,000 cash on November 1, 2017, by signing a 120-day, 11% notes with a face value of $255,000.

  1. On what date does this note mature?
    • March 27, 2018.
    • March 28, 2018.
    • March 29, 2018.
    • March 30, 2018.
    • March 01, 2018.

2 & 3.What is the amount of interest expense in 2017 and 2018 from this note?

4. Prepare journal entries to record (a) issuance of the note, (b) accrual of interest at the end of 2017, and (c) payment of the note at maturity. (Assume no reversing entries are made.)

 

Exercise 9-16A Gross and net pay computation

Lenny Florita, an unmarried employee, works 50 hours in the week ended January 12. His pay rate is $11 per hour, and his wages are subject to no deductions other than FICA Social Security, FICA Medicare, and federal income taxes. He claims three withholding allowances. Compute his regular pay, overtime pay (for this company, workers earn 150% of their regular rate for hours in excess of 40 per week), and gross pay. Then compute his FICA tax deduction (use 6.2% for the Social Security portion and 1.45% for the Medicare portion), income tax deduction, total deductions, and net pay.

QS 9-11 Times interest earned

Compute the times interest earned for Park Company, which reports income before interest expense and income taxes of $3,610,000 and interest expense of $190,000.

Use the following information for the Exercises below.

[The following information applies to the questions displayed below.]

Exercise 9-5 Computing payroll taxes

BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $118,500 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA taxes are 2.9% of the first $7,000 paid to its employee.

Gross Pay through August Gross Pay for September
a. $6,700 $400
b. $18,500 $2,400
c. $112,500 $8,300

Compute BMX’s amounts for each of these four taxes as applied to the employee’s gross earnings for September under each of three separate situations (a), (b), and (c).

Problem 10-2A Straight-Line: Amortization of bond discount

Hillside issues $1,200,000 of 8%, 15-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,036,935.

Required:

  1. Prepare the January 1, 2017, journal entry to record the bonds’ issuance.
  2. (a) For each semiannual period, complete the table below to calculate the cash payment.(b) For each semiannual period, complete the table below to calculate the straight-line discount amortization.(c) For each semiannual period, complete the table below to calculate the bond interest expense.
  3. Complete the below table to calculate the total bond interest expense to be recognized over the bonds’ life.
  4. Prepare the first two years of an amortization table using the straight-line method.
  5. Prepare the journal entries to record the first two interest payments.

Problem 10-3A Straight-Line: Amortization of bond premium

Hillside issues $2,200,000 of 7%, 15-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $2,692,790.

Required:

  1. Prepare the January 1, 2017, journal entry to record the bonds’ issuance.
  2. (a) For each semiannual period, complete the table below to calculate the cash payment.(b) For each semiannual period, complete the table below to calculate the straight-line premium amortization.(c) For each semiannual period, complete the table below to calculate the bond interest expense.
  3. Complete the below table to calculate the total bond interest expense to be recognized over the bonds’ life.
  4. Prepare the first two years of an amortization table using the straight-line method
  5. Prepare the journal entries to record the first two interest payments.