ACCT 211 Connect Homework Chapter 9 Exercises Liberty University Solution

Question 1

Sylvestor Systems borrows $193,000 cash on May 15, 2017, by signing a 30-day, 7% note.

1. On what date does this note mature?

2. Assume the face value of the note equals $193,000, the principal of the loan.

(a) Prepare the journal entry to record issuance of the note.

(b) First, complete the table below to calculate the interest expense at maturity. Use those calculated values to prepare your journal entry to record payment of the note at maturity. (Use 360 days a year. Round final answers to the nearest whole dollar.)

Question 2

Keesha Co. borrows $220,000 cash on November 1, 2017, by signing a 150-day, 9% note with a face value of $220,000.

1. On what date does this note mature? (Assume that February has 28 days)

2. & 3. What is the amount of interest expense in 2017 and 2018 from this note? (Use 360 days a year. Round final answers to the nearest whole dollar.)

4. Prepare journal entries to record (a) issuance of the note, (b) accrual of interest at the end of 2017, and (c) payment of the note at maturity. (Assume no reversing entries are made.) (Use 360 days a year. Do not round intermediate calculations.)

Question 3

BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $118,500 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA taxes are 2.9% of the first $7,000 paid to its employee.

Compute BMX’s amounts for each of these four taxes as applied to the employee’s gross earnings for September under each of three separate situations (a), (b), and (c). (Round your answers to 2 decimal places.)

Question 4

Assuming situation a, prepare the employer’s September 30 journal entries to record salary expense and its related payroll liabilities for this employee. The employee’s federal income taxes withheld by the employer are $90 for this pay period. (Round your answers to 2 decimal places.)

Question 5

Hitzu Co. sold a copier costing $3,500 with a two-year parts warranty to a customer on August 16, 2017, for $7,000 cash. Hitzu uses the perpetual inventory system. On November 22, 2018, the copier requires on-site repairs that are completed the same day. The repairs cost $141 for materials taken from the repair parts inventory. These are the only repairs required in 2018 for this copier.

1. How much warranty expense does the company report in 2017 for this copier?

2. How much is the estimated warranty liability for this copier as of December 31, 2017?

3. How much warranty expense does the company report in 2018 for this copier?

5. Prepare journal entries to record (a) the copier’s sale; (b) the adjustment on December 31, 2017, to recognize the warranty expense; and (c) the repairs that occur in November 2018.

Question 6

For the year ended December 31, 2017, Lopez Company has implemented an employee bonus program based on Lopez’s net income, which employees will share equally. Lopez’s bonus expense is computed as $59,524.

1&2. Prepare the journal entry at December 31, 2017, to record the bonus due and January 19, 2018, to record payment of the bonus to employees.

Question 7

Use the following information from separate companies a through f:

Which company indicates the strongest ability to pay interest expense as it comes due?