Question

1.) A business issued a 30-day note for $39,000 to a creditor on account. The note was discounted at 9%. Assume a 360-day year.

a. Journalize the entry to record the issuance of the note. For a compound transaction, if an amount box does not require an entry, leave it blank. If necessary, round to one decimal place.

a.	Accounts Payable
	Interest Expense
	Notes Payable

2.)

Breakin Away Company 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	$2,210 per week		$36 per hour		$48 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 by adding $356.90 to 28% of the difference between the employee's amount subject to withholding and $1,796.00. Assume further that the social security tax rate was 6%, 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. Assume the normal working hours in a week are 40 hours. If required, round your answers to two decimal places.

ConsultantComputer ProgrammerAdministrator

Gross pay$$$

Net pay$$$

3.)

Parker Manufacturing Co. warrants its products for one year. The estimated product warranty is 5% of sales. Assume that sales were $295,000 for January. In February, a customer received warranty repairs requiring $200 of parts and $100 of labor.

For a compound transaction, if an amount box does not require an entry, leave it blank.

a. Journalize the adjusting entry required at January 31, the end of the first month of the current fiscal year, to record the accrued product warranty.

b. Journalize the entry to record the warranty work provided in February.

4.)

Gmeiner Co. had the following current assets and liabilities on December 31 of two recent years:

				Current Year		Previous Year
Current assets:
	Cash			$533,000		$814,000
	Accounts receivable			472,000		383,000
	Inventory			291,000		323,000
		Total current assets		$1,296,000		$1,520,000
Current liabilities:
	Current portion of long-term debt			$107,000		$95,000
	Accounts payable			214,000		189,000
	Accrued and other current liabilities			349,000		346,000
		Total current liabilities		$670,000		$630,000

a. Determine the quick ratio for December 31 of both years. If required, round your answers to one decimal place.

	Quick Ratio
Previous year:
Current year:

Answer 1

1) a. Journal entry for note discounting

Business issued the note to a creditor for $39,000 for 30-days. ideally after 30-days creditor should receive $39,000 after 30 days for that note. but if the creditor wants the money now he can go to a bank and discount that note at 9% discount rate.

Discount = $39,000*9%*30/360 = $3,510*30/360 = $292.5

Creditor will get $39,000 - $292.5 = $38,707.5

After 30-days business need to pay $39,000 value of note to the bank. It's a kind of loan in which bank gave us $38,705.5 loan for 30-days at 9% interest which is $292.5. we paid that loan amount to the creditor. after 30-days we need to pay back the loan amount + interest to bank.

Journal entries:

Accounts	Debit	Credit
Accounts Payable	$ 38,707.5
Interest Expense	$        292.5
Notes Payable		$ 39,000.0

After 30-days when value of note will be paid then journal entry will be:

Notes payable Debit $39,000

Cash Credit $39,000