Allocating Payments and Receipts to Fixed Asset Accounts The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale ceramic business. The receipts are identified by an asterisk. a. Fee paid to attorney for title search $3,700 b. Cost of real estate acquired as a plant site: Land 390,300 Building (to be demolished) 37,100 c. Delinquent real estate taxes on property, assumed by purchaser 22,000 d. Cost of razing and removing building acquired in B 6,100 e. Proceeds from sale of salvage materials from old building 3,700* f. Special assessment paid to city for extension of water main to the property 14,600 g. Architects and engineers fees for plans and supervision 53,700 h. Premium on one-year insurance policy during construction 5,200 i. Cost of filling and grading land 21,500 j. Money borrowed to pay building contractor 915,200* k. Cost of repairing windstorm damage during construction 6,700 l. Cost of paving parking lot to be used by customers 18,500 m. Cost of trees and shrubbery planted 11,000 n. Cost of floodlights installed on parking lot 1,300 o. Cost of repairing vandalism damage during construction 3,000 p. Proceeds from insurance company for windstorm and vandalism damage 7,300* q. Payment to building contractor for new building 975,700 r. Interest incurred on building loan during construction 45,900 s. Refund of premium on insurance policy (h) canceled after 11 months 433* Required: 1. Assign each payment and receipt to Land (unlimited life), Land Improvements (limited life), Building, or Other Accounts. Choose the correct account from the dropdown list for each letter and enter the appropriate amount. Enter receipts as negative amounts using the minus sign. Item Account Amount a. $ b. $ c. $ d. $ e. $ f. $ g. $ h. $ i. $ j. $ k. $ l. $ m. $ n. $ o. $ p. $ q. $ r. $ s. $ 2. Determine the amount debited to Land, Land Improvements, and Building. Land Land Improvements Building $ $ $ 3. Since land used as a plant site lose its ability to provide services, it depreciated. Land improvements lose their ability to provide services as time passes and are therefore . 4. What would be the effect on the income statement and balance sheet if the cost of filling and grading land of $21,500 [payment (i)] was incorrectly classified as Land Improvements rather than Land? Assume Land Improvements are depreciated over a 20-year life using the double-declining-balance method.

Multiple Choice 10-2

Excel Spreadsheets: SA 10-1, SA 10-2, SA 10-3

Excel Tutorials: Current Liabilities and Payroll, Absolute and Relative Cell References

SA 10-1: Computing employee net pay

JK Flowers Corporation has a single employee, S. Singh. Singh worked for 47 hours during the week, of which seven hours were overtime. Singh is paid $19.40 per hour. Overtime hours are paid at a rate of 150% of straight time. Additional information for Singh is as follows:

Federal income tax (weekly withholding)	$201.30
Retirement savings (weekly)	75.00
Earnings prior to payroll period	27,950

The social security tax rate is assumed to be 6% on all employee earnings. The Medicare rate is assumed to be 1.5% on all employee earnings.

Open the Excel file SA10-1.

Prepare a spreadsheet to compute the weekly gross pay, deductions, and net pay for S. Singh.

When you have completed the pay calculations, perform a save as, replacing the entire file name with the following: SA10-1_[your first name initial]_[your last name]

SA 10-2: Computing employee net pay, multiple employees

The Myatt Companies prepared the following weekly schedule for its three employees:

	A	B	C	D
1	Inputs:	M. Todd	J. Kress	V. Johns
2	Hours worked straight-time	40	40	40
3	Hours worked overtime	6	12	0
4	Hourly rate	$24.00	$30.00	$16.50
5	Overtime premium	200%	150%	150%
6	Weekly withholding	$218.42	$278.32	$186.45
7	Earnings prior to payroll period	$68,915	$71,725	$32,710
8	Retirement savings	$60.00	$150.00	$50.00
9

The social security rate is assumed to be 6% on all employee annual earnings. The Medicare rate is assumed to be 1.5%.

Open the Excel file SA10-2.

Prepare a spreadsheet to compute the weekly gross pay, deductions, and net pay for each employee.

When you have completed the pay calculations, perform a save as, replacing the entire file name with the following: SA10-2_[your first name initial]_[your last name]

SA 10-3: Computing employee net pay, multiple time periods

Repair-It-for-U has a single employee, Josh Reed, who has the following weekly payroll information for four weeks:

	A	B	C	D	E
1		Week 1	Week 2	Week 3	Week 4
2	Hours worked straight-time	40	39	40	36
3	Hours worked overtime	5	0	3	0
4	Weekly withholding	$145.00	$121.00	$138.00	$109.00
5

Reed had a pay rate of $16 per hour and an overtime premium of 150%. The social security tax rate is assumed to be 6% of employee earnings. The Medicare tax rate is assumed to be 1.5% of employee earnings.

Open the Excel file SA10-3.

Prepare a spreadsheet to compute the weekly gross pay, deductions, and net pay for each week.

When you have completed the pay calculations, perform a save as, replacing the entire file name with the following: SA10-3_[your first name initial]_[your last name]

When calculating Gross Earnings, what values are necessary?

a.Total hours worked times hourly rate plus overtime hours worked times hourly rate times overtime premium

b.Hours worked (straight time) plus overtime hours worked times hourly rate times overtime premium

c.Total hours worked times hourly rate times overtime premium times overtime hours

d.(Hours worked (straight time) times hourly rate) plus (overtime hours worked times hourly rate times overtime premium)

Entries for Bonds Payable, including bond redemption

The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year:

Year 1
July 1.	Issued $6,060,000 of five-year, 10% callable bonds dated July 1, Year 1, at a market (effective) rate of 12%, receiving cash of $5,613,978. Interest is payable semiannually on December 31 and June 30.
Dec. 31.	Paid the semiannual interest on the bonds. The bond discount amortization of $44,602 is combined with the semiannual interest payment.
Dec. 31.	Closed the interest expense account.
Year 2
June 30.	Paid the semiannual interest on the bonds. The bond discount amortization of $44,602 is combined with the semiannual interest payment.
Dec. 31.	Paid the semiannual interest on the bonds. The bond discount amortization of $44,602 is combined with the semiannual interest payment.
Dec. 31.	Closed the interest expense account.
Year 3
June 30.	Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $267,614 after payment of interest and amortization of discount have been recorded. (Record the redemption only.)

Required:

1. Journalize the entries to record the foregoing transactions. If an amount box does not require an entry, leave it blank or enter "0". When required, round your answers to the nearest dollar.

Date	Account	Debit	Credit
Year 1
July 1
Dec. 31-Bond
Dec. 31-Closing
Year 2
June 30
Dec. 31-Bond
Dec. 31-Closing
Year 3
June 30

2. Indicate the amount of the interest expense in (a) Year 1 and (b) Year 2.

a. Year 1 $ b. Year 2 $

3. Determine the carrying amount of the bonds as of December 31, Year 2. $