journalizing

journalizing

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Complete the following exercises and problems in Excel:

· P11-26A

· P11-27A

· P14-30A

· P14-31A

P-11-26A Computing and journalizing payroll amounts- Net Pay $114,654

Louis Welch is general manager of United Salons. During 2014, Welch worked for the company all year at a $10,200 monthly salary. He also earned a year-end bonus equal to 10% of his annual salary.

Welch’s federal income tax withheld during 2014 was $850 per month, plus $924 on his bonus check. State income tax withheld came to $70 per month, plus $40 on the bonus. FICA tax was withheld on the annual earnings. Welch authorized the following payroll deductions: Charity Fund contribution of 1% of total earnings and life insurance of $5 per month.

United incurred payroll tax expense on Welch for FICA tax. The company also paid state unemployment tax and federal unemployment tax. In addition, United provides Welch with health insurance at a cost of $150 per month. During 2014, United paid $4,000 into Welch’s retirement plan.

Requirements

1. Compute Welch’s gross pay, payroll deductions, and net pay for the full year 2014. Round all amounts to the nearest dollar.

2. Compute United’s total 2014 payroll expense for Welch.

3. Make the journal entry to record United’s expense for Welch’s total earnings for the year, his payroll deductions, and net pay. Debit Salaries Expense and Bonus Expense as appropriate. Credit liability accounts for the payroll deductions and Cash for net pay. An explanation is not required.

P11-27A A Journalizing liability transactions

The following transactions of Denver Pharmacies occurred during 2013 and 2014:

Jan. 29 Cash $16,960

Dec. 31 Interest Expense $360

2013

Jan.9 Purchased computer equipment at a cost of $9,000, signing a six-month, 6% note payable for that amount.

29 Recorded the week’s sales of $64,000, three-fourths on credit and one-fourth for cash. Sales amounts are subject to a 6% state sales tax. Ignore cost of goods sold.

Feb. 5 Sent the last week’s sales tax to the state.

Jul. 9 Paid the six-month, 6% note, plus interest, at maturity.

Aug.31 Purchased merchandise inventory for $12,000, signing a six-month, 9% note payable. The company uses the perpetual inventory system.

Dec.31 Accrued warranty expense, which is estimated at 2% of sales of $603,000.

31 Accrued interest on all outstanding notes payable.

2014

Feb. 28 Paid off the 9% note plus interest at maturity.

Journalize the transactions in Denver’s general journal. Explanations are not required.

P14-30A Journalizing liability transactions and reporting them on the balance sheet

The following transactions of Emergency Pharmacies occurred during 2014 and2015:

1. Mar. 1, 2015 Interest Expense DR $1,462

2. Total Liabilities $492,443

2014

Mar. 1 Borrowed $360,000 from Lessburg Bank. The six-year, 10% note requires payments due annually, on March 1. Each payment consists of $60,000 principal plus one year’s interest.

Dec. 1 Mortgaged the warehouse for $200,000 cash with Saputo Bank. The mortgage requires monthly payments of $4,000. The interest rate on the note is 9% and accrues monthly. The first payment is due on January 1, 2015.

31 Recorded interest accrued on the Saputo Bank note.

31 Recorded interest accrued on the Lessburg Bank note.

2015

Jan. 1 Paid Saputo Bank monthly mortgage payment.

Feb. 1 Paid Saputo Bank monthly mortgage payment.

Mar.1 Paid Saputo Bank monthly mortgage payment.

1 Paid first installment on note due to Lessburg Bank.

Requirements

1. Journalize the transactions in the Emergency Pharmacies general journal. Round all answers to the nearest dollar. Explanations are not required.

2. Prepare the liabilities section of the balance sheet for Emergency Pharmacies on March 1, 2015.

P14-31A Analyzing, journalizing, and reporting bond transactions

Billy’s Hamburgers issued 5%, 10-year bonds payable at 90 on December 31, 2012. At December 31, 2014, Billy reported the bonds payable as follows:

2. Discount CR $2,000

Long-term Liabilities:

Bonds Payable $ 400,000

Less: Discount on Bonds Payable 32,000 $ 368,000

Billy pays semiannual interest each June 30 and December 31.

Requirements

1. Answer the following questions about Billy’s bonds payable:

a. What is the maturity value of the bonds?

b. What is the carrying amount of the bonds at December 31, 2014?

c. What is the semiannual cash interest payment on the bonds?

d. How much interest expense should the company record each year?

2. Record the June 30, 2014, semiannual interest payment and amortization of discount.