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5741 Homework # 2 Question




Question;Question 1;The;controller for Mason Company neglected to have her staff accrue the payroll for;the last week in December, 2012. The;following data should have been considered and accounted for in Mason Company?s;books.;Total;Payroll = $1,350,000;Income Tax to be withheld = $150,000;FICA Taxes applicable to the payroll accrual = $28,000;FUTA Tax on accrued payroll = $4, 000;Compensated absences to the payroll = $75,000 vacation time and $85,000 sick;time.;Employees who do not take vacation will receive compensation in lieu of time;taken off.;Sick time does not vest and if the employee does not use their sick time, it is;forfeited back to company.;Union;dues that should have been withheld from employee?s payroll = $12,000;Question 2;On;November 1, 2012, Aladdin Company entered into an agreement whereby Aladdin;Company accepted a discounted note payable for $2,000,000 (Mason Company;received cash). The terms were 0%;interest (market rate of interest is 6%) and payable on May 1, 2013. Make all necessary entries on the books of Mason;Company for 2012.;Question 3;Mason;Company entered into a lease agreement with Aladdin Company to purchase a piece;of equipment on January 1, 2012. The;term of the lease are: 8%, 5 years lease with a 6 year useful life. The machine has a fair value of;$600,000. The residual value is;zero. Mason Company does not know the;interest rate that Aladdin Company uses.;Assume that the entries have not yet been made on the books of Mason Company.;Requirement: Prepare a five year amortization;schedule. Make all necessary entries on;the books of Mason Company for the first year.;Question 4;Requirement: Assume that the lessor?s (Aladdin Company);interest rate is also 8% and that the lease qualifies as a direct financing;lease, using the above information in question 4: Prepare the lessor?s amortization table for;the duration of the lease and make all necessary entries on the books of Aladdin;Company for the first two years.;Question 5;On;January 1st, 2012, Aladdin Company purchased $1,000,000 of 8%, 5;year, Mason Company bonds on the open market for $960,000. The bonds are dated and were issued by Mason;Company on January 1st, 2010.;The bonds pay interest each January 1st and July 1st. The effective interest method is used.;Requirement: Make any necessary entries for Mason Company.


Paper#54014 | Written in 18-Jul-2015

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