Question
To receive points for correct answers, all work must be shown - i f no work is shown, points will not be awarded for correct
To receive points for correct answers, all work must be shown - if no work is shown, points will not be awarded for correct answers. Please label clearly your answers for each question. Points for each question are given below.
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Problem 1
To help with cash flow, Scotts Camping World (SCW) borrowed $50,000 from their bank on January 1, 2033, by issuing a 5-year, 8% installment loan. Payments of $12,523 are due each year on December 31, beginning in 2033.
(2 points) Question 1 - What is the principal balance on this installment note at the end of 2035 after the loan payment is recorded? Round your answers to the nearest whole dollar. (Hint: Use an amortization schedule to determine your answer.)
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Problem 2
Refer back to Problem #1. In addition to the installment loan, SCW issued $200,000 of 5-year, 7% bonds for $190,000 on January 1, 2033. Interest is paid semiannually on June 30 and December 31. SCW uses the straight-line method for amortizing bond discounts and premiums. SCW also had the following financial information during the life of the loan: earned cash revenue of $85,000 each year, paid cash operating expenses of $35,000 each year, purchased land in 2033 for $35,000, and purchased computer equipment in 2035 for $6,500 (estimated useful life of 5 years and salvage value of $600).
(2 points) Question 2 What is SCWs net income for 2035?
(2 points) Question 3 What is SCWs total assets for 2035?
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Problem 3
The following data comes from the payroll department of Jack Corporation for December 2032. Employees (and the related payroll taxes) will not be paid until January 6, 2033.
Gross employee earnings $360,000
Federal income taxes withheld $50,000
Social security taxes withheld $22,320
Medicare taxes withheld $5,220
FUTA $2,160
SUTA $19,440
(2 points) Question 4 What is the amount of wages payable for the month of December?
(2 points) Question 5 Based solely on this information, what amount will the balance sheet show as total liabilities for at the end of December?
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