1
On November 1, 2019, Franco Corporation purchased equipment costing $20,000 by giving a 6%, 90-day note. Prepare general journal entries to record:

a) The acquisition of the equipment

b) The year end accrual of interest at December 31 the payment of the note on January 31.

Problem 2
During the first quarter of 2020, Pouncey Products sold 40,000 units of its best-selling product. Pouncey expects 2% of these units to be returned for repair under warranty. The typical cost to repair items under warranty is $10.

The actual costs incurred to repair products under warranty ended up being $7,100.
Prepare the journal entries Pouncey would make to estimate its warranty expense for the quarter, and an entry to record the actual warranty costs incurred.

Problem 3
List 3 things that would be withheld from an employee’s paycheck and 3 payroll taxes levied against an employer.

Problem 4
Explain the difference between a capital lease and an operating lease and give an example of each.