PAYROLL ENTRIES

J&W Buffet Co. employees earned $350,000 in the week ended December 17, 2010.Of this, $26,775 was deducted from employees' pay for FICA and $62,000 was deducted for income taxes.

Prepare the journal entry to record the employees' portion of payroll for December 17, 2010.

Prepare the journal entry to record the employer's share of FICA payroll taxes for December 17, 2010.

HW 9 - 2

NOTES PAYABLE

Mumford Co. borrowed a $100,000 note payable on June 1, 2010, with 6% interest. The note is due on May 31, 2011.

Prepare the journal entry to record the issuance of the note and receipt of cash on June 1, 2010.

Prepare the adjusting journal entry to record the interest owed at the end of the accounting period on December 31, 2010.

Prepare the journal entries to record the interest and principal payments to the lender on May 31, 2011.

HW 9 - 3

UNEARNED REVENUE

On January 1, 2009, Charlie Rangel paid $2,000 for a two-year membership to the Beam Gym.

Prepare the journal entry to record the receipt of cash on January 1, 2009.

By December 31, 2009, one half of Rangel's membership expired. Prepare the required adjusting journal entry on that date.

By December 31, 2010, the remainder of Rangel's membership expired. Prepare the required adjusting journal entry on that date.

Post the entries above to the Unearned Revenue account:

Unearned Revenue

HW 9 - 4

ISSUING BONDS

Issuance of $800,000, 5-year, 8% payable annually (market rate 12%) for cash of $684,627 on 1/1/07

Were these bonds issued at a discount or at a premium? Why?

Prepare the journal entry to record the issuance (sale) of the bonds:

Complete the following interest schedule (assuming straight-line amortization):

Date

Cash

Payment of Interest

Interest Expense

Amortization of Discount

Carrying Value (Net Liability)

1/1/2007

None

None

None

12/31/2007

12/31/2008

12/31/2009

12/31/2010

12/31/2011

Prepare the journal entry to record the first payment of interest on 12/31/2007:

HW 9 - 5

ISSUING BONDS

Issuance of $1,200,000, 5-year, 10% payable annually (market rate 8%) for cash of $1,295,844 on 1/1/07

Were these bonds issued at a discount or at a premium? Why?

Prepare the journal entry to record the issuance (sale) of the bonds:

Complete the following interest schedule (assuming straight-line amortization):

Date

Cash

Payment of Interest

Interest Expense

Amortization of Premium

Carrying Value (Net Liability)

1/1/2007

None

None

None

12/31/2007

12/31/2008

12/31/2009

12/31/2010

12/31/2011

Prepare the journal entry to record the first payment of interest on 12/31/2007