1. a company issues $10,000, 10%, 5 year bonds with semi annual payments
principal amount, face value matuity value or par value: $10,000
stated or contract interest rate: 10% (per year)
term 5 years
a.Calculate the semi annual interest payments
b. calculate the selling price of the bond assuming market itnerest rate is 12%
present value factor of a single amount (6%, 10 periods)=0.55839
present value factor of an annuity (6%, 10 periods)= 7.36009
c. prepare the journal entry to record the issuance of the bond
d. prepare the journal entry to record the first interest payment using the effective interest method for the discount or premium amortization
e. prepare the journal entry to record the payment of bonds at maturity
2.step child co. reported gross salaries of $795,000 use the following information related to salaries and payroll taxes
salaries subject to unemployment $325,000
FICA rates 7.65%
SUTA rates 5.4%
FUTA rates .8%
Federal income tax withheld $84.500
state income tax withheld $48,924
required
a. prepare the journal entry to record salaries expense for the period
b. prepare the journal entry to record payroll tax expense for the period
3. solrac clothing co, needed cash for its operations in the short term,. the company management decided to obtain the funds through issuing a short term note payable.
the bank made a loan to solrac on September 1,2010 for $350,000 secured by a note. the note is payable on February 28, 2011 and the annual interest rate on the note is 11%
required
a prepare the journal entry at the time of issuance of the note (9/01/2010)
b prepare the journal entry at December 31, 2010 to accrue the interest expenses for 2010
c prepare the journal entry at February 28. 2011 for the repayment of the note
4. on December 31, 2007, drew company issued $170,000 five year bonds for $155,000 the stated rate of interest 6 percent and interest is paid annually on December 31
Required
provide the necessary journal entry for the first payment of interest assuming the straight line amortization method is used