Exercise 1

Lakeview Company completed the following two transactions. The annual accounting period ends December 31.

a. On December 31, calculated the payroll, which indicates gross earnings for wages ($60,000), payroll deductions for income tax ($6,000), payroll deductions for FICA ($4,500), payroll deductions for American Cancer Society ($2,250), employer contributions for FICA (matching), and state and federal unemployment taxes ($525). Employees were paid in cash, but payments for the corresponding payroll deductions have not yet been made and employer taxes have not yet been recorded.

b. Collected rent revenue of $5,625 on December 10 for office space that Lakeview rented to another business. The rent collected was for 30 days from December 12 to January 10 and was credited in full to Deferred Revenue.

Required:

1. & 2. Prepare the journal entries to record payroll on December 31, the collection of rent on December 10 and adjusting journal entry on December 31.

3. Show how any of the liabilities related to these items should be reported on the companys balance sheet at December 31.

• Req 1 and 2
• Req 3

Prepare the journal entries to record payroll on December 31, the collection of rent on December 10 and adjusting journal entry on December 31. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Journal entry worksheet

1. Record the wages expense, including payroll deductions.

2. Record the payroll tax expense

3. Record the collection of 30 days' rent in advance amounting to $5,625.

4. Record the adjusting entry relating to rent

Exercise 2

Jack Hammer Company completed the following transactions. The annual accounting period ends December 31.

Apr.		30		Received $555,000 from Commerce Bank after signing a 12-month, 7 percent, promissory note.
June		6		Purchased merchandise on account at a cost of $72,000. (Assume a perpetual inventory system.)
July		15		Paid for the June 6 purchase.
Aug.		31		Signed a contract to provide security service to a small apartment complex starting in September, and collected six months fees in advance amounting to $22,200.
Dec.		31		Determined salary and wages of $37,000 were earned but not yet paid as of December 31 (ignore payroll taxes).
Dec.		31		Adjusted the accounts at year-end, relating to interest.
Dec.		31		Adjusted the accounts at year-end, relating to security service.

Required:

1. & 2. Prepare journal entries for each of the transactions through August 31 and adjusting entries required on December 31.

3. Show how all of the liabilities arising from these items are reported on the balance sheet at December 31.

1. Record the borrowing of $555,000

2. Record the purchase of inventory worth $72,000 on account

3. Record the payment for inventory in full

4. Record the collection of six month's security service fees in advance amounting to $22,200

5. Record the wages earned, but not yet paid as of December 31

6. Record the adjusting entry relating to interest

7. Record the adjusting entry relating to interest security service fees.

Exercise 3

Net Work Corporation, whose annual accounting period ends on December 31, issued the following bonds:

Date of bonds: January 1, 2018

Maturity amount and date: $250,000 due in 10 years (December 31, 2027)

Interest: 12.5 percent per year payable each December 31

Date issued: January 1, 2018

Required:

For each of the three independent cases that follow, provide the following amounts to be reported on the January 1, 2018, financial statements immediately after the bonds were issued: (Deductions should be indicated by a minus sign.)

	January 1, 2018Financial Statements:	Case A (issued at 100)	Case B (at 97)	Case C (at 103)
a.	Bonds payable
b.	Unamortized premium (discount)
c.	Carrying value

Req 1 and 2 Req3 Prepare the journal entries to record payroll on December 31, the collection of rent on December 10 and adjusting journal entry on December 31. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 2 3 4 Record the wages expense, including payroll deductions. Note: Enter debits before credits. General Journal Debit Credit Date Dec 31 Req 1 and 2 Req3 Show how any of the liabilities related to these items should be reported on the company's balance sheet at December 31. (Do not round intermediate calculations.) LAKEVIEW COMPANY Balance Sheet (partial) At December 31 Req 1 and 2 Req 3 Prepare journal entries for each of the transactions through August 31 and adjusting entries required on December 31. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 2 3 4 5 6 7 Record the borrowing of $555,000. Note: Enter debits before credits. Date General Journal Debit Credit Apr 30 Req 1 and 2 Req 3 Show how all of the liabilities arising from these items are reported on the balance sheet at December 31. (Do not round intermediate calculations.) JACK HAMMER COMPANY Balance Sheet (partial) At December 31