XACC291 Week4 P10 1A P10 6A And BYP10 7

Topics: Taxation, Value added tax, Taxation in the United States Pages: 6 (863 words) Published: April 21, 2015
P10-1A On January 1, 2011, the ledger of Mane Company contains the following liability accounts.

Accounts Payable $52,000
Sales Taxes Payable 7,700
Unearned Service Revenue 16,000
During January the following selected transactions occurred.

Jan. 5 Sold merchandise for cash totaling $22,680, which includes 8% sales taxes. 12 Provided services for customers who had made advance payments of $10,000. (Credit Service Revenue.) 14 Paid state revenue department for sales taxes collected in December 2010 ($7,700). 20 Sold 800 units of a new product on credit at $50 per unit, plus 8% sales tax. 21 Borrowed $18,000 from UCLA Bank on a 3-month, 8%, $18,000 note. 25 Sold merchandise for cash totaling $12,420, which includes 8% sales taxes.

Instructions

(a) Journalize the January transactions.

Jan 5th
Cash
22,680

Sales

21,000

Sales Tax Payable

1,680

Jan 12th
Unearned Revenue
10,000

Service Revenue

10,000

Jan 14th
Sales Tax Payable
7,700

Cash

7,700

Jan 20th
Cash
43,200

Sales

40,000

Sales Tax Payable

3,200

Jan 21th
Cash
18,000

Notes Payable

40,000

Jan 25th
Cash
12,420

Sales

11,500

Sales Tax Payable

920

(b) Journalize the adjusting entries at January 31 for the outstanding notes payable. (Hint: Use one-third of a month for the UCLA Bank note.)

Jan 31th
Interest Expense
40

Interest Payable

40

18000 x .08 x [(1/12) * (1/3)]

(c) Prepare the current liabilities section of the balance sheet at January 31, 2011. Assume no change in accounts payable.

Notes Payable
18,000

Accounts Payable
52,000

Unearned Service Revenue
6,000

Sales Tax Payable
5,800

Interest Payable
40

Total Current Liabilities

81,840

P10-6A On July 1, 2011, Atwater Corporation issued $2,000,000 face value, 10%, 10-yearbonds at $2,271,813. This price resulted in an effective-interest rate of 8% on the bonds. Atwater uses the effective-interest method to amortize bond premium or discount. The bonds pay semi-annual interest July 1 and January 1.

Instructions

(Round all computations to the nearest dollar.)

(a) Prepare the journal entry to record the issuance of the bonds on July 1, 2011.

Cash
2,271,813

Bonds Payable

2,000,000
Premium on Bonds Payable

271,813

(b) Prepare an amortization table through December 31, 2012 (3 interest periods) for this bon issue.

Semi Annual Interest Periods
Interest to be Paid
Interest Expense
Premium Amortization
Unamortized Premium
Bond Carrying Value

271,813
2,271,813
1
100,000
90,873
9,127
262,686
2,262,686
2
100,000
90,507
9,493
253,193
2.253,193
3
100,000
90,128
9,872
243,321
2,243,321

(c) Prepare the journal entry to record the accrual of interest and the amortization of the premium on December 31, 2011.

Bond Interest Expense
90,873

Premium on Bonds Payable
9,127

Bond Interest Payable

100,000

(d) Prepare the journal entry to record the payment of interest and the amortization of the premium on July 1, 2012, assuming no accrual of interest on June 30.

Bond Interest Expense
90,507

Premium on Bonds Payable
9,493

Cash

100,000

(e) Prepare the journal entry to record the accrual of interest and the amortization of the premium on December 31, 2012.

Bond Interest Expense
90,128

Premium on Bonds Payable
9,872

Bond Interest Payable

100,000

BYP 10-7 As indicated in the “All About You” feature in this chapter (page 468), medical costs are substantial and rising. But will medical costs be your most substantial expense over your lifetime?

Not likely. Will it be housing or food? Again, not likely. The answer is in the Accounting Across the Organization box on page 450. On average, Americans work 74 days to afford their federal taxes. Companies, too, have large tax burdens. They look very hard at tax issues in deciding where to...
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