Financial Accounting Questions and Answers

In the following summary of data for a payroll period, some amounts have been intentionally omitted: Earnings: 1. At regular rate ? 2. At overtime rate $135,000 3. Total earnings ? Deductions: 4. Social security tax 54,000 5. Medicare tax 13,500 6. Income tax withheld 225,000 7. Medical insurance 31,500 8. Union dues ? 9. Total deductions 335,250 10. Net amount paid 564,750 Accounts debited: 11. Factory Wages 475,000 12. Sales Salaries ? 13. Offi  ce Salaries 200,000  a. Calculate the amounts omitted in lines (1), (3), (8), and (12). b. Journalize the entry to record the payroll accrual. c. Journalize the entry to record the payment of the payroll. Answer: a. Summary: (1) $765,000; (3) $900,000; (8) $11,250; (12) $225,000    Net amount paid ....................................................  $564,750   Total deductions....................................................   335,250  (3) Total earnings..................................................

Donohue Professional Services has three employees—a consultant, a computer programmer, and an administrator. The following payroll information is available for each  employee: Consultant Computer Programmer Administrator Regular earnings rate $2,800 per week $30 per hour $42 per hour Overtime earnings rate Not applicable 1.5 times hourly rate 2 times hourly rate Number of withholding allowances 3 2 1 For the current pay period, the computer programmer worked 60 hours and the administrator worked 50 hours. The federal income tax withheld for all three employees, who are single, can be determined from the wage bracket withholding table in Exhibit 3 in the chapter. Assume further that the social security tax rate was 6.0%, the Medicare tax rate was 1.5%, and one withholding allowance is $70. Determine the gross pay and the net pay for each of the three employees for the current pay period. Answer: Computer  Consultant Programmer Administrator  Regular earnings..................

An employee earns $60 per hour and 1.5 times that rate for all hours in excess of 40 hours per week. Assume that the employee worked 55 hours during the week, Assume further that the social security tax rate was 6.0%, the Medicare tax rate was 1.5%, and federal income tax to be withheld was $743. a. Determine the gross pay for the week. b. Determine the net pay for the week. Answer: a. Regular pay (40 hrs. × $60)...........................................  $2,400.00  Overtime pay (15 hrs. × $90) ........................................   1,350.00  Gross pay.......................................................................  $3,750.00  b. Gross pay.......................................................................  $3,750.00  Less: Social security tax (6% × $3,750) ..................... $225.00   Medicare tax (1.5% × $3,750)............................ 56.25   Federal withholding...........................................  74...

Burger King Holdings, Inc., the operator and franchisor of Burger King restaurants, reported the following information about its long-term debt in the notes to a recent financial statement: Long-term debt is comprised of the following: June 30 2009 2008 Notes payable $823,100,000 $876,200,000 Less current portion (67,500,000) (7,400,000) Long-term debt $755,600,000 $868,800,000 a. How much of the notes payable was disclosed as a current liability on the June 30, 2009, balance sheet? b. How much did the total current liabilities change between 2008 and 2009 as a result of the current portion of long-term debt? c. If Burger King did not issue additional notes payable during 2010, what would be the total notes payable on June 30, 2010? Answer: a. $67,500,000, the amount disclosed as the current portion of long-term debt. b. The current liabilities increased by $60,100,000 ($67,500,000 – $7,400,000). c. $755,600,000 ($823,100,000 – $67,500,000)

A business issued a 30-day note for $72,000 to a creditor on account. The note was discounted at 7%. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity. Answer: a. Accounts Payable.......................................................... 71,580  Interest Expense............................................................ 420*   Notes Payable...........................................................  72,000   *$72,000 × 7% × 30/360   b. Notes Payable................................................................ 72,000   Cash ..........................................................................  72,000 

On June 30, Beahm Management Company purchased land for $250,000 and a building for $350,000, paying $300,000 cash and issuing an 8% note for the balance, secured by a mortgage on the property. The terms of the note provide for 20 semiannual payments of $15,000 on the principal plus the interest accrued from the date of the preceding payment. Journalize the entry to record (a) the transaction on June 30, (b) the payment of the first installment on December 31, and (c) the payment of the second installment the following June 30. Answer: a. June 30 Building......................................................... 350,000    Land .............................................................. 250,000     Note Payable...........................................  300,000     Cash.........................................................  300,000   b. Dec. 31 Note Payable................................................. 15,000    Interest Ex...

A business issued a 45-day, 6% note for $80,000 to a creditor on account. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including interest. Answer: a. Accounts Payable.......................................................... 80,000   Notes Payable...........................................................  80,000  b. Notes Payable................................................................ 80,000  Interest Expense............................................................ 600*   Cash ..........................................................................  80,600   *$80,000 × 6% × 45/360