Week 3 Assignment in WileyPLUS

Week 3 Assignment in WileyPLUS

 

P9-7A E10-5 E10-8 E10-13 E10-22 E10-24 BYP10-1 BYP10-2 P10-9A P10-13A IFRS 10-4

 

E10-5 During the month of March, Olinger Company’s employees earned wages of $67,800. Withholdings related to these wages were $5,187 for Social Security (FICA), $7,945 for federal income tax, $3,284 for state income tax, and $424 for union dues. The company incurred no cost related to these earnings for federal unemployment tax but incurred $742 for state unemployment tax.

Prepare the necessary March 31 journal entry to record salaries and wages expense and salaries and wages payable. Assume that wages earned during March will be paid during April. 

 

Date     Account Titles and Explanation           Debit    Credit

Mar. 31

 

Prepare the entry to record the company’s payroll tax expense.

 

 Date    Account Titles and Explanation           Debit    Credit

Mar. 31

 

E10-8 On August 1, 2014, Ortega Corporation issued $813,600, 7%, 10-year bonds at face value. Interest is payable annually on August 1. Ortega’s year-end is December 31.

Prepare journal entries to record the issuance of the bonds.

Date     Account Titles and Explanation           Debit    Credit

Aug. 1

 

Prepare journal entries to record the accrual of interest on December 31, 2014.

 

Date                 Account Titles and Explanation           Debit    Credit

Dec. 31

 

Prepare journal entries to record the payment of interest on August 1, 2015.

Date                 Account Titles and Explanation           Debit    Credit

Aug. 1

 

E10-13 Romine Company issued $530,700 of 9%, 10-year bonds on January 1, 2014, at face value. Interest is payable annually on January 1.

Prepare the journal entries to record the issuance of the bonds. 

Date                 Account Titles and Explanation           Debit    Credit

Jan. 1, 2014

 

Prepare the journal entries to record the accrual of interest on December 31, 2014.

Date                 Account Titles and Explanation           Debit    Credit

Dec. 31, 2014

 

Prepare the journal entries to record the payment of interest on January 1, 2015. 

Date     Account Titles and Explanation           Debit    Credit

Jan. 1, 2015

 

Prepare the journal entries to record the redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded.

Date                 Account Titles and Explanation           Debit    Credit

Jan. 1, 2024

 

E10-22 Cole Corporation issued $432,000, 7%, 25-year bonds on January 1, 2014, for $385,887. This price resulted in an effective-interest rate of 8% on the bonds. Interest is payable annually on January 1. Cole uses the effective-interest method to amortize bond premium or discount.

 

Prepare the schedule using effective-interest method to amortize bond premium or discount of Cole Corporation.

Interest  Periods Interest to Be Paid Interest Expense to Be Recorded Discount Amortization Unamortized Discount Bond Carrying Value

Issue date

1

2

 

Prepare the journal entries to record the issuance of the bonds.

Date                 Account Titles and Explanation           Debit                Credit

Jan. 1, 2014

 

Prepare the journal entries to record the accrual of interest and the discount amortization on December 31, 2014.

Date                 Account Titles and Explanation           Debit    Credit

Dec. 31, 2014

 

Prepare the journal entries to record the payment of interest on January 1, 2015.

 Date                 Account Titles and Explanation           Debit    Credit

Jan. 1, 2015

 

E10-24 Nance Co. receives $306,800 when it issues a $306,800, 8%, mortgage note payable to finance the construction of a building at December 31, 2014. The terms provide for semiannual installment payments of $17,742 on June 30 and December 31.

Prepare the schedule using effective-interest method to amortize bond premium or discount of Nance Co.

 

Semiannual Interest Period Cash Payment Interest Expense Reduction of Principal Principal Balance

Issue date        

6/30/15

12/31/15

 

Prepare the journal entries to record the mortgage loan. 

 Date                 Account Titles and Explanation           Debit    Credit

Dec. 31, 2014

 

Prepare the journal entries to record the first two installment payments. 

Date                                         Account Titles and Explanation     &nb
sp;     Debit    Credit

First Installment Payment

June 30, 2015

Second Installment Payment

Dec. 31, 2015

 

Broadening Your Perspective 10-1

The financial statements of Tootsie Roll are presented below.

Answer the following questions.

What were Tootsie Roll’s total current liabilities at December 31, 2011? 

Current liabilities as at December 31, 2011

 

What was the increase/decrease in Tootsie Roll’s total current liabilities from the prior year?

 Change in current liabilities

 

How much were the accounts payable at December 31, 2011?

 Accounts payable

 

BYP10-2 The Hershey Company

Broadening Your Perspective 10-2

The financial statements of The Hershey Company and Tootsie Roll are presented below.

NOTE 6—OTHER INCOME (EXPENSE), NET: Other income (expense), net is comprised of the following:

2011    2010    2009

Interest and dividend income                                                   $1,087 $879    $1,439

Gains (losses) on trading securities relating to deferred compensation plans293,3644,524

Interest expense                                                                                   (121)    (142)    (243)

Impairment of equity method investment.                               _          _          (4,400)

Equity method investment loss                                                            (194)    (342)    (233)

Foreign exchange gains (losses)                                                           2,098   4,090   951

Capital gains (losses)                                                               (277)    (28)      (38)

Miscellaneous, net                                                                   274      537      100

$2,946 $8,358 $2,100

As of December 31, 2009, management determined that the carrying value of an equity method investment was impaired as a result of accumulated losses from operations and review of future expectations. The Company recorded a pre-tax impairment charge of $4,400 resulting in an adjusted carrying value of $4,961 as of December 31, 2009. The fair value was primarily assessed using the present value of estimated future cash flows.

Based on the information contained in these financial statements, compute the current ratio for 2011 for each company.

Hershey           Tootsie Roll

Current ratio:   1                      :1

 

Based on the information contained in these financial statements, compute the following 2011 ratios for each company.

(1) Debt to assets.

(2) Times interest earned. (Hershey’s total interest expense for 2011 was $94,780,000. See Tootsie Roll’s Note 6 for its interest expense.)

 

Hershey           Tootsie Roll

Debt to assets               %                     %

Times interest earned   times                times

 

P9-7A In recent years, Farr Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below.

Machine Acquired       Cost                 Salvage            Value   Useful Life(in years) Depreciation  Method

1          Jan. 1, 2012     $128,000         $34,400                       9                                  Straight-line

2          July 1, 2013     81,000             11,600  &nb
sp;          5                                  Declining-balance

3          Nov. 1, 2013   79,890             7,290               7                                  Units-of-activity

 

For the declining-balance method, Farr Company uses the double-declining rate. For the units-of-activity method, total machine hours are expected to be 33,000. Actual hours of use in the first 3 years were: 2013, 750; 2014, 3,510; and 2015, 5,240.

Compute the amount of accumulated depreciation on each machine at December 31, 2015.

MACHINE 1    MACHINE 2    MACHINE 3

Accumulated Depreciation at December 31

 

If machine 2 was purchased on April 1 instead of July 1, what would be the depreciation expense for this machine in 2013? In 2014?

2013    2014

Depreciation Expense

 

P10-9A Wempe Co. sold $3,367,000, 8%, 10-year bonds on January 1, 2014. The bonds were dated January 1, 2014, and pay interest on January 1. The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually.

Prepare the journal entries to record the issuance of the bonds assuming they sold at: (1) 105 and (2) 96.

 No.      Date  Account Titles and Explanation Debit Credit

1.         1/1/14

2.         1/1/14

 

Prepare amortization tables for issuance of the bonds sold at 105 for the first three interest payments.

 

Prepare amortization tables for issuance of the bonds sold at 96 for the first three interest payments.

 

Prepare the journal entries to record interest expense for 2014 under both of the bond issuances

assuming they sold at: (1) 105 and (2) 96. 

No.      Date  Account Titles and Explanation Debit                Credit

1.         12/31/14

2.         12/31/14

 

Show the long-term liabilities balance sheet presentation for issuance of the bonds sold at 105 at December 31, 2014.

WEMPE Co.
Balance Sheet (Partial)
December 31, 2014

Show the long-term liabilities balance sheet presentation for issuance of the bonds sold at 96 at December 31, 2014.

WEMPE Co.
Balance Sheet (Partial)
December 31, 2014

 

P10-13A Grace Herron has just approached a venture capitalist for financing for her new business venture, the development of a local ski hill. On July 1, 2013, Grace was loaned $198,000 at an annual interest rate of 7%. The loan is repayable over 5 years in annual installments of $48,290, principal and interest, due each June 30. The first payment is due June 30, 2014. Grace uses the effective-interest method for amortizing debt. Her ski hill company’s year-end will be June 30.

Prepare an amortization schedule for the 5 years, 2013–2018. 

Period              Cash Payment  Interest Expense           Principal          Reduction        Balance

July 1, 2013

June 30, 2014

June 30, 2015

June 30, 2016

June 30, 2017

June 30, 2018

*

Amount may be off due to rounding.

 

Prepare all journal entries for Grace Herron for the first 2 fiscal years ended June 30, 2014, and June 30, 2015.

Date                 Account Titles and Explanation                       Debit    Credit

July 1/13

June 30/14

June 30/15

 

Show the balance sheet presentation of the note payable as of June 30, 2015. (Hint: Be sure to distinguish between the current and long-term portions of the note.) 

GRACE HERRON
Balance Sheet (Partial)
June 30, 2015

IFRS 10-4 Ratzlaff Company issues €2 million, 10-year, 8% bonds at 97, with interest payable on July 1 and January 1.

Prepare the journal entry to record the sale of these bonds on January 1, 2014. 

 

Date     Account Titles and Explanation                       Debit    Credit

Jan. 1

 

Assuming instead that the above bonds sold for 104, prepare the journal entry to record the sale of these bonds on January 1, 2014. 

Date     Account Titles and Explanation                       Debit    Credit

Jan. 1

 

 

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