Acc 291 – principles of accounting ii week 3 assignment

Question 1

During the month of March, Olinger Company’s employees earned wages of $71,000. Withholdings related to these wages were $5,432 for Social Security (FICA), $8,320 for federal income tax, $3,439 for state income tax, and $444 for union dues. The company incurred no cost related to these earnings for federal unemployment tax but incurred $777 for state unemployment tax

Prepare the necessary March 31 journal entry to record salaries and wages expense and salaries and wages payable. Assume that wages earned during March will be paid during April. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Prepare the entry to record the company’s payroll tax expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Question 2

On August 1, 2014, Ortega Corporation issued $571,200, 8%, 10-year bonds at face value. Interest is payable annually on August 1. Ortega’s year-end is December 31.

Prepare journal entries to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Prepare journal entries to record the accrual of interest on December 31, 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Prepare journal entries to record the payment of interest on August 1, 2015. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Question 3

Romine Company issued $469,200 of 9%, 10-year bonds on January 1, 2014, at face value. Interest is payable annually on January 1

Prepare the journal entries to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Prepare the journal entries to record the accrual of interest on December 31, 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Prepare the journal entries to record the payment of interest on January 1, 2015. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Prepare the journal entries to record the redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Question 4

Cole Corporation issued $548,000, 9%, 21-year bonds on January 1, 2014, for $500,605. This price resulted in an effective-interest rate of 10% on the bonds. Interest is payable annually on January 1. Cole uses the effective-interest method to amortize bond premium or discount.

Prepare the schedule using effective-interest method to amortize bond premium or discount of Cole Corporation. (Round answers to 0 decimal places, e.g. 125.)

Prepare the journal entries to record the issuance of the bonds. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Prepare the journal entries to record the accrual of interest and the discount amortization on December 31, 2014. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Prepare the journal entries to record the payment of interest on January 1, 2015. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Question 5

Nance Co. receives $480,500 when it issues a $480,500, 8%, mortgage note payable to finance the construction of a building at December 31, 2014. The terms provide for semiannual installment payments of $27,787 on June 30 and December 31.

Prepare the schedule using effective-interest method to amortize bond premium or discount of Nance Co. (Round answers to 0 decimal places, e.g. 125.)

Prepare the journal entries to record the mortgage loan. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Prepare the journal entries to record the first two installment payments. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Question 6

The financial statements of Tootsie Roll are presented below.

The financial statements of Tootsie Roll are presented below.

What were Tootsie Roll’s total current liabilities at December 31, 2011? (Enter amount in thousands.)

What was the increase/decrease in Tootsie Roll’s total current liabilities from the prior year? (Enter amount in thousands.)

How much were the accounts payable at December 31, 2011? (Enter amount in thousands.)

Question 7

The financial statements of The Hershey Company and Tootsie Roll are presented below.

Based on the information contained in these financial statements, compute the current ratio for 2011 for each company. (Round answers to 2 decimal places, e.g. 15.25.)

Based on the information contained in these financial statements, compute the following 2011 ratios for each company. (Round answers to 1 decimal places, e.g. 15.2% or 15.2 times.)

Question 8

In recent years, Farr Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below

Compute the amount of accumulated depreciation on each machine at December 31, 2015.

If machine 2 was purchased on April 1 instead of July 1, what would be the depreciation expense for this machine in 2013? In 2014?

Question 9

Wempe Co. sold $3,455,000, 10%, 10-year bonds on January 1, 2014. The bonds were dated January 1, 2014, and pay interest on January 1. The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually.

Prepare the journal entries to record the issuance of the bonds assuming they sold at: (1) 104 and (2) 96. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Prepare amortization tables for issuance of the bonds sold at 104 for the first three interest payments.

Prepare amortization tables for issuance of the bonds sold at 104 for the first three interest payments.

Prepare amortization tables for issuance of the bonds sold at 96 for the first three interest payments.

Prepare amortization tables for issuance of the bonds sold at 96 for the first three interest payments

Prepare the journal entries to record interest expense for 2014 under both of the bond issuances assuming they sold at: (1) 104 and (2) 96. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Prepare the journal entries to record interest expense for 2014 under both of the bond issuances assuming they sold at: (1) 104 and (2) 96. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Question 10

Grace Herron has just approached a venture capitalist for financing for her new business venture, the development of a local ski hill. On July 1, 2013, Grace was loaned $292,000 at an annual interest rate of 6%. The loan is repayable over 5 years in annual installments of $69,320, principal and interest, due each June 30. The first payment is due June 30, 2014. Grace uses the effective-interest method for amortizing debt. Her ski hill company’s year-end will be June 30.

Prepare an amortization schedule for the 5 years, 2013–2018. (Round answers to 0 decimal places, e.g. 125.)

Prepare all journal entries for Grace Herron for the first 2 fiscal years ended June 30, 2014, and June 30, 2015. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Show the balance sheet presentation of the note payable as of June 30, 2015. (Hint: Be sure to distinguish between the current and long-term portions of the note.) (Round answers to 0 decimal places, e.g. 125.)

Question 11

Ratzlaff Company issues €2 million, 10-year, 8% bonds at 97, with interest payable on July 1 and January 1.

Prepare the journal entry to record the sale of these bonds on January 1, 2014. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Assuming instead that the above bonds sold for 104, prepare the journal entry to record the sale of these bonds on January 1, 2014. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)