Question 17 (Mandatory) (2.5 points)

Jones, Inc. has an Account Payable of $40,000 which it cannot pay on time. Jones vendor allows the company to replace the Accounts Payable with a 108-day, 7 percent, $40,000 interest-bearing note.

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Assume Jones closes its books 27 days after the note is issued (Day 27). Provide the journal entry Jones will record on Day 27 when the books are closed:

Question 17 options:

	Dr. Interest Expense $840 Cr. Interest Payable $840
	Dr. Interest Expense $420 Cr. Interest Payable $420
	Dr. Interest Expense $630 Cr. Interest Payable $630
	Dr. Interest Expense $210 Cr. Interest Payable $210

Question 18 (Mandatory) (2.5 points)

Jones, Inc. has an Account Payable of $40,000 which it cannot pay on time. Jones vendor allows the company to replace the Accounts Payable with a 108-day, 7 percent, $40,000 interest-bearing note.

_______________________________________________

Assume Jones closes its books 27 days after the note is issued (Day 27). Provide the journal entry Jones will record on Day 108 upon maturity of the note:

Question 18 options:

	Dr. Note Payable $40,000 Dr. Interest Expense $630 Dr. Interest Payable $210 Cr. Cash $40,840
	Dr. Note Payable $40,000 Dr. Interest Expense $630 Cr. Cash $40,630
	Dr. Note Payable $40,000 Dr. Interest Revenue $630 Dr. Interest Payable $210 Cr. Cash $40,840
	Dr. Note Payable $40,000 Dr. Interest Expense $840 Cr. Cash $40,840

Payroll Liabilities

Question 19 (Mandatory) (2.5 points)

William Corp. pays its employees every two weeks. Employee wages earned over a two-week period is $250,000. All wages are subject to social security and Medicare taxes, while $50,000 of wages are subject to federal and state unemployment taxes. Tax rates are the following:

Social security tax 6.0% Medicare tax 1.5% State unemployment compensation tax 5.4% Federal unemployment compensation tax 0.8%

Additionally, the total amount withheld from wages for federal income taxes is $75,000 and the total amount withheld for state income taxes is $12,500.

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When William Corp. records the journal entry to recognize payroll every two weeks, Wage Expense will be:

Question 19 options:

	Debited for $250,000
	Credited for $143,750
	Debited for $143,750
	Neither debited nor credited
	Credited for $250,000