ACC 291 Week 3: E9-7, E10-5, E10-10, E10-11, E10-15, E10-18, P10-5A, P10-9A

Exercise E9-7

Brainiac Company purchased a delivery truck for $30,000 on January 1, 2011. The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2011 and 12,000 in 2012.

E10-5

Don Walls’s gross earnings for the week were $1,780, his federal income tax withholding was $301.63, and his FICA total was $135.73.

Instructions

1. What was Walls’s net pay for the week?
2. Journalize the entry for the recording of his pay in the general journal. (Note: Use Salaries Payable; not Cash.)
3. Record the issuing of the check for Walls’s pay in the general journal.

Calculate and record net pay.

E10-10

On January 1, Neuer Company issued $500,000, 10%, 10-year bonds at par. Interest is payable semiannually on July 1 and January 1.

Instructions

Present journal entries to record the following.

1. The issuance of the bonds.
2. The payment of interest on July 1, assuming that interest was not accrued on June 30.
3. The accrual of interest on December 31.

Prepare entries for issuance of bonds, and payment and accrual of bond interest.

E10-11

On January 1, Flory Company issued $300,000, 8%, 5-year bonds at face value. Interest is payable semiannually on July 1 and January 1.

Instructions

Prepare journal entries to record the following events.

1. The issuance of the bonds.
2. The payment of interest on July 1, assuming no previous accrual of interest.
3. The accrual of interest on December 31.

Prepare entries for bonds issued at face value.

E10-15

Leoni Co. receives $240,000 when it issues a $240,000, 10%, mortgage note payable to finance the construction of a building at December 31, 2011. The terms provide for semiannual installment payments of $20,000 on June 30 and December 31.

Instructions

Prepare the journal entries to record the mortgage loan and the first two installment payments.

Prepare entries to record mortgage note and installment payments.

E10-18

Hrabik Corporation issued $600,000, 9%, 10-year bonds on January 1, 2011, for $562,613. This price resulted in an effective-interest rate of 10% on the bonds. Interest is payable semiannually on July 1 and January 1. Hrabik uses the effective-interest method to amortize bond premium or discount.

Instructions

Prepare the journal entries to record the following. (Round to the nearest dollar.)

1. The issuance of the bonds.
2. The payment of interest and the discount amortization on July 1, 2011, assuming that interest was not accrued on June 30.
3. The accrual of interest and the discount amortization on December 31, 2011.

Prepare entries for issuance of bonds, payment of interest, and amortization of discount using effective-interest method.

P10-5A

ordyce Electronics issues a $400,000, 8%, 10-year mortgage note on December 31, 2010. The proceeds from the note are to be used in financing a new research laboratory. The terms of the note provide for semiannual installment payments, exclusive of real estate taxes and insurance, of $29,433. Payments are due June 30 and December 31.

Prepare installment payments schedule and journal entries for a mortgage note payable.

Instructions

1. Prepare an installment payments schedule for the first 2 years.
2. Prepare the entries for (1) the loan and (2) the first two installment payments.(b) June 30 Mortgage Notes Payable $13,433
3. Show how the total mortgage liability should be reported on the balance sheet at December 31, 2011.(c) Current liability—2011: $29,639

P10-9A

Elkins Company sold $2,500,000, 8%, 10-year bonds on July 1, 2011. The bonds were dated July 1, 2011, and pay interest July 1 and January 1. Elkins Company uses the straight-line method to amortize bond premium or discount. Assume no interest is accrued on June 30.

Prepare entries to record issuance of bonds, interest, and straight-line amortization of bond premium and discount.

Instructions

1. Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2011, assuming that the bonds sold at 104.(a) Amortization $5,000
2. Prepare journal entries as in part (a) assuming that the bonds sold at 98.(b) Amortization $2,500
3. Show balance sheet presentation for each bond issue at December 31, 2011.(c) Premium on bonds payable $95,000 Discount on bonds payable $47,50