Financial Accounting: An Integrated Statements Approach, 2nd Edition

Dec. 14 Record the entry for the biweekly payroll. A summary of the payroll record follows:

Salary distribution:

Operations $38,000

Officers 17,400

Office 10,800 $66,200

Deductions:

FICA tax $ 4,634

Federal income tax withheld 11,784

State income tax withheld 2,979

Savings bond deductions 600

Medical insurance deductions 1,000 20,997

Net amount $45,203

14 Issued Check No. 738 in payment of the net amount of the biweekly payroll.

14 Record the entry for payroll taxes on employees’ earnings of December 14: FICA tax,

$4,634; state unemployment tax, $285; federal unemployment tax, $75.

17 Issued Check No. 744 to Cullowee National Bank for $21,052, in payment of $9,268 of

social security tax and $11,784 of employees’ federal income tax due.

18 Issued Check No. 750 to Bent Creek Insurance Company for $6,000, in payment of the

semiannual premium on the group medical insurance policy.

28 Record the entry for the biweekly payroll. A summary of the payroll record follows:

Salary distribution:

Operations $39,000

Officers 17,500

Office 11,000 $67,500

Deductions:

FICA tax $ 4,658

Federal income tax withheld 12,015

State income tax withheld 3,038

Savings bond deductions 600 20,311

Net amount $47,189

28 Issued Check No. 782 in payment of the net amount of the biweekly payroll.

28 Record the entry for payroll taxes on employees’ earnings of December 28: FICA tax,

$4,658; state unemployment tax, $171; federal unemployment tax, $43.

30 Issued Check No. 791 to Cullowee National Bank for $1,200 to purchase U.S. savings

bonds for employees.

30 Issued Check No. 792 for $18,005 to Cullowee National Bank in payment of employees’

state income tax due on December 31.

Instructions

1. Record the transactions.


2. Record the following adjusting entries on December 31:
   a. Salaries accrued: operations salaries, $3,900; officers’ salaries, $1,750; office salaries,
   $1,100. The payroll taxes are immaterial and are not accrued.
   b. Vacation pay, $11,000.

Canton Corporation produces and sells ski equipment. On July 1, 2006, Canton Corporation is-

sued $12,000,000 of 10-year, 12% bonds priced to yield an effective interest rate of 11%. Interest

on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the com-

pany is the calendar year.

Instructions

1. Calculate the selling price and the amount of discount or premium of the bond issue. Use
   the present value tables in Appendix A.


2. Record the entry for the amount of the cash proceeds from the sale of the bonds.

484 Chapter 10 Liabilities

Alternate Problem

10-3B

Bond premium; entries for

bonds payable transactions

Goal 2

1. Selling Price =
   $12,717,033.60