Problem 3 (13 pts.)

On November 1, 2019, Franco Corporation purchased equipment costing $20,000 by giving a 6%, 90-day note.

Prepare general journal entries to record:

1. the acquisition of the equipment

b) the year end accrual of interest at December 31

3. the payment of the note on January 31.

Problem 4 (7 pts.)

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 5 (9 pts.)

List 3 things that would be withheld from an employees paycheck and 3 payroll taxes levied against an employer.

Problem 6 (5 pts.)

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