Solve the following problems below using the Excel form provided by clicking her
ID: 2453308 • Letter: S
Question
Solve the following problems below using the Excel form provided by clicking here.
On October 1, MAP Consulting Company borrows $15,000 cash on a note payable from ABC Bank with terms of 120 days @ 10%. They agreed to use a 360-day year for simple interest calculations. MAP Consulting Company’s fiscal year ends on December 31. Journalize the following transactions: 10/01—the initiation of the note, 12/31—the adjusting entry for accrued interest (hint: accrue for 90 days), and 02/01 payment of the note on its due date.
MAP Consulting Company has 5 employees. Their salary for the week ending June 25, 2010 and federal and state withholding taxes have already been calculated for your convenience.
Instructions:
Determine how much Social Security and Medicare tax is due for each employee using the exact rates as they currently prevail. No employee has reached the Social Security ceiling at this time.
Assuming there are no other deductions except the deductions from the table (make sure that you include Social security and Medicare tax); determine the net pay of each employee.
Journalize the payroll entry for the period on June 25, 2010 payable on June 28, 2010.
Journalize the payroll tax expense entry on June 25, 2010 payable on June 28, 2010. (Assume that all employees have already met the ceiling for Federal and State Unemployment Tax therefore: no unemployment taxes are due at this time).
Explanation / Answer
(a) Journalizing the following transactions:
10/01 Cash Account Dr. $15000
To Note Payable $15000
($15,000 cash on a note payable from ABC Bank with terms of 120 days )
12/31 Interest Expense Dr. $375
To Interest Payable $375
(Being adjusting entry for accrued interest for 90 days )
Note: Interest for 90 days
Accrued Interest = $15000 * 90/360 * 10%
= $375
31/01 Note Payable Dr. $15000
Interest Payable Dr. $375
Interest Expense Dr. $125
To Cash $15500
(Being Note payable,accured expense and Interest expenses for remaining 30 days paid off )
Note: Remaining 30 days interest = $15000 * 10% * 30/360
= $125
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