Exercise 11-5 (Algo) Interest-bearing notes payable with year-end adjustments LO P1

Keesha Company borrows $200,000 cash on December 1 of the current year by signing a 90-day, 9%, $200,000 note. 1. On what date does this note mature? 2. & 3. What is the amount of interest expense in the current year and the following year from this note? 4. Prepare journal entries to record (a) issuance of the note, (b) accrual of interest on December 31, and (c) payment of the note at maturity.

2.

	Total through maturity	Interest Expense Current Year	Interest Expense Following Year
Principal
Rate (%)
Time
Total interest

Journal Entry :

- Record the issuance of the note on December 1.

- Record the interest accrued on the note as of December 31, current year.

- Record payment of the note at maturity, assuming no reversing entries were made on January 1.

Listed below are a few transactions and events of Maxum Company.

1. Employees earn vacation pay at a rate of one day per month. Maxum estimated and must expense $4,050 of accrued vacation benefits for the year.
2. During December, Maxum Company sold 4,300 units of a product that carries a 60-day warranty. December sales for this product total $125,000. The company expects 9% of the units to need warranty repairs, and it estimates the average repair cost per unit will be $13.

Prepare adjusting entries at December 31 for Maxum Companys year-end financial statements for each of the above separate transactions.

3. On January 8, the end of the first weekly pay period of the year, Regis Company's employees earned $23,760 of office salaries and $60,840 of sales salaries. Withholdings from the employees' salaries include FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, $12,860 of federal income taxes, $1,320 of medical insurance deductions, and $880 of union dues. No employee earned more than $7,000 in this first period. Required: 1-a. Calculate below the amounts for each of these four taxes of Regis Company. Regiss state unemployment tax rate is 5.4% of the first $7,000 paid to each employee. The federal unemployment tax rate is 0.6%. 1-b. Prepare the journal entry to record Regis Company's January 8 employee payroll expenses and liabilities. 2. Prepare the journal entry to record Regiss employer payroll taxes resulting from the January 8 payroll. Regiss state unemployment tax rate is 5.4% of the first $7,000 paid to each employee. The federal unemployment tax rate is 0.6%.