ournal Shaded cells have feedback Check My Work Sep. 15 The face of the note is
ID: 2588511 • Letter: O
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ournal Shaded cells have feedback Check My Work Sep. 15 The face of the note is credited as a payable and the discount is debited along with an amount for the land less the discount. In other words, interest is paid up front. Assuming a 360-day year, the discount is computed by multiplying the discount rate times the face amount of the note times short-term note duration of 90/360. Oct. 17 Record the Note Receivable as a debit for the face value. Cash is also debited for the sales price minus the note. Reduce the equipment account by the cost of the asset. Also eliminate the accumulated depreciation associated with the equipment. By comparing the equipment book value to the sale price, a gain or loss on the sale can be determined. Remember gains are credited and losses are debited Nov. 30 Debit an expense for the gross salaries. Credit payables for the federal income tax, Medicare, and social security withholdings and the net pay amount. Nov. 30 Debit an expense for the payroll taxes. Credit liabilities for the social security, Medicare, and unemployment taxes. Calculate unemployment by multiplying earnings subject to these taxes by the respective percentages applicable to state and federal unemployment and list separately in your journal entry. Dec. 14 Reduce the liability for the face of the Sep. 15 note and reduce Cash. Dec. 31 Recall that the pension cost of a defined benefit plan is debited to Pension Expense. Cash is credited for the amount contributed (funded) by the employer. Any unfunded amount is credited to Unfunded Pension Liability.Explanation / Answer
Date Particulars Debit Credit
Sep. 15 Land A/c Dr. 975,000
Discount A/c Dr. 25,000
To Note Payable A/c 1,000,000
(Being Notes payable recognised)
Note: Face value assumed to be 1,000,000
Discount assumed @10%
Oct. 17 Note receivable A/c Dr. 500,000
Cash A/c Dr. 1,75,000
Accumulated Depreciation A/c Dr. 400,000
To Equipment A/c 1000,000
To Gain on Sale A/c 75,000
(Being Equipment sold)
Note: Equipment is assumed to be depreciated for 4 years @10% on SLM basis
Nov. 30 Salary A/c Dr. 48,000
To Federal Income Tax A/c 2,970
To Medicare Payable A/c 696
To Social Security Withholdings A/c 2,400
To Cash A/c 41,934
(Being Salary expense booked)
Nov. 30 Payroll Tax Expense A/c Dr. 5,880
To Medicare Payable A/c 696
To Social Security Withholdings A/c 2,400
To Federal Unemployment Payable A/c 288
To State Unemployment Payable A/c 1,920
(Being Payroll expense recognised)
Dec. 14 Note Payable A/c Dr. 1,000,000
To Cash A/c 1,000,000
(Being Note Payable paid)
Dec. 31 Pension Expense A/c Dr.
To Defined Benefit Pension Liability A/c
(Being Pension expense booked)
Defined Benefit Pension Liability A/c Dr.
To Cash A/c
(Being Employee Contribution recognised)
Other comprehensive income (OCI) A/c Dr.
To Unfunded Pension Liability A/c
(Being unfunded amount recorded)
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