Question 3 ( 3 Marks)

Below are selected transactions of Noor Co. for 2011:

1. On May 10, the company purchased goods from Ahmed Company for $60,000, terms 2/10, n/30. Purchases and accounts payable are recorded at net amounts. The invoice was paid on May 18.

2. On June 1, the company purchased equipment for $180,000 from Sultan Co., paying $60,000 in cash and giving a one-year, 8% note for the balance.

3. On September 30, the company borrowed $162,000 from the Dubai Bank by signing a one year, zero-interest-bearing note for $180,000. The banks discount rate was 10%.

Required:

(a) Prepare the journal entries necessary to record the transactions above using appropriate dates.

(b) Prepare the adjusting entries necessary at December 31, 2011 in order to properly report interest expense related to the above transactions.

(c) Indicate the manner in which the above transactions should be reflected in the Current Liabilities section Noor Co's December 31, 2011 balance sheet

Question 4 ( 3 Marks)

Employee earnings records for Omar Company reveal the following gross earnings for four employees through the pay period of December 15.

Ali $ 95,500 Saleh $115,500

Waleed $114,200 Saeed $118,000

For the pay period ending December 31, each employee's gross earnings is $4,800. The FICA tax rate is 7.65% on gross earnings of $117,000.

Required:

Compute the FICA withholdings that should be made for each employee for the December 31 pay period. (Show computations.)