Problem One

A business issued a 60-day, 5% note for $120,000 to a creditor on account. The company uses a 360-day year for interest calculations. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including interest.

JOURNAL

Page XX

DATE

ITEM

PR

DEBIT

CREDIT

Problem Two

An employee earns $39 per hour and 1.5 times that rate for all hours in excess of 40 hours per week.Assume that the employee worked 45 hours during the week, and that the gross pay prior to the current week totaled $60,000.Assume further that the social security tax rate was 6.0%, the Medicare tax rate was 1.5%, and the federal income tax to be withheld was $450.

(a)Determine the gross pay for the week.

:

Calculation

Amount

Regular pay

Overtime pay

Gross pay

Problem Two cont.

(b)Determine the net pay for the week.

Calculation

Amount

Gross pay

From previous page

Social security tax

Medicare tax

Federal withholding

Net pay

(c) Journalize the recording of the payroll assuming the payroll was recorded on

April 30, 2020

JOURNAL

Page XX

DATE

ITEM

PR

DEBIT

CREDIT

Problem Three

List four internal controls that relate directly to payroll.