Problem 1 – Entries for notes payable A business issued a 120-day, 6% note for $

Question

Problem 1 – Entries for notes payable

A business issued a 120-day, 6% note for $68,000 to a creditor on account. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including interest.

Problem 2 – Calculate payroll

An employee earns $25 per hour and 2 times that rate for all hours in excess of 40 hours per week. Assume that the employee worked 50 hours during the week. Assume further that the social security tax rate was 6.0%, the Medicare tax rate was 1.5%, and federal income tax to be withheld was $550.

Determine the gross pay for the week.

Determine the net pay for the week.

Problem 3 – Payroll entries

The payroll register for Crouse Company for the week ended November 18 indicated the following:

Social Security tax withheld57,000

Medicare tax withheld14,250

Federal income tax withheld175,000

In addition, state and federal unemployment taxes were calculated at the rate of 3.8% and 0.6%, respectively, on $250,000 of salaries.

Journalize the entry to record the payroll for the week on November 18.

Journalize the entry to record the payroll tax expense incurred for the week of November 18.

Explanation / Answer

(a)

Journal Entry for the issuance of the note:

Date

Accounts Titles / Explanations

Debit

Credit

(Issue Date)

Cash

$     68,000

Notes Payable

$     68,000

(Being Note payable issued )

(b)

Journal Entry for the issuance of the note:

Date

Accounts Titles / Explanations

Debit

Credit

(Maturity Date)

Notes Payable

$68,000.00

Interest Expense (68000*6%*120 Days / 365 Days)

$ 1,341.37

Cash (68000+1341.37)

$69,341.37

(Being Notes payable repaid)

(a)

Journal Entry for the issuance of the note:

Date

Accounts Titles / Explanations

Debit

Credit

(Issue Date)

Cash

$     68,000

Notes Payable

$     68,000

(Being Note payable issued )

(b)

Journal Entry for the issuance of the note:

Date

Accounts Titles / Explanations

Debit

Credit

(Maturity Date)

Notes Payable

$68,000.00

Interest Expense (68000*6%*120 Days / 365 Days)

$ 1,341.37

Cash (68000+1341.37)

$69,341.37

(Being Notes payable repaid)

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