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ACC291 WEEK 3 E10-6 E10-18 P3-10A P10-6A |

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E10-6 According to the accountant of Ulner Inc.,its payroll taxes for the week were as fol- lows: $198.40 for FICA taxes, $19.84 for federal unemployment taxes, and $133.92 for state unemployment taxes.;Instructions Journalize the entry to record the accrual of the payroll taxes.;E10-8 Jim Thome has prepared the following list of statements about bonds.;1. Bonds are a form of interest-bearing notes payable.;2. When seeking long-term financing, an advantage of issuing bonds over issuing common stock is that stockholder control is not affected.;3. When seeking long-term financing, an advantage of issuing common stock over issuing bonds is that tax savings result.;4. Secured bonds have specific assets of the issuer pledged as collateral for the bonds.;5. Secured bonds are also known as debenture bonds.;6. Bonds that mature in installments are called term bonds.;7. A conversion feature may be added to bonds to make them more attractive to bond buyers.;8. The rate used to determine the amount of cash interest the borrower pays is called the stated rate.;9. Bond prices are usually quoted as a percentage of the face value of the bond.;10. The present value of a bond is the value at which it should sell in the marketplace.;Instructions Identify each statement above as true or false. If false, indicate how to correct the statement.;E10-18 Hrabik Corporation issued $600,000, 9%, 10-year bonds on January 1, 2011, for $562,613.This price resulted in an effective-interest rate of 10% on the bonds.Interest is payable semiannually on July 1 and January 1. Hrabik uses the effective-interest method to amortize bond premium or discount.;Instructions Prepare the journal entries to record the following. (Round to the nearest dollar.);(a) The issuance of the bonds.;(b) The payment of interest and the discount amortization on July 1,2011,assuming that interest was not accrued on June 30.;(c) The accrual of interest and the discount amortization on December 31, 2011.;P10-3A On May 1, 2011, Newby Corp. issued $600,000, 9%, 5-year bonds at face value. The bonds were dated May 1, 2011, and pay interest semiannually on May 1 and November 1. Financial statements are prepared annually on December 31.;Instructions;(a) Prepare the journal entry to record the issuance of the bonds.;(b) Prepare the adjusting entry to record the accrual of interest on December 31, 2011. (c) Show the balance sheet presentation on December 31, 2011.;(d) Prepare the journal entry to record payment of interest on May 1,2012,assuming no accrual of interest from January 1, 2012, to May 1, 2012.;(e) Prepare the journal entry to record payment of interest on November 1, 2012.;(f) Assume that on November 1, 2012, Newby calls the bonds at 102. Record the redemption of the bonds;P10-6A On July 1, 2011, Atwater Corporation issued $2,000,000 face value, 10%, 10-year bonds at $2,271,813.This price resulted in an effective-interest rate of 8% on the bonds.Atwater uses the effective-interest method to amortize bond premium or discount.The bonds pay semi- annual interest July 1 and January 1.;Instructions (Round all computations to the nearest dollar.);(a) Prepare the journal entry to record the issuance of the bonds on July 1, 2011.;(b) Prepare an amortization table through December 31, 2012 (3 interest periods) for this bond issue.;(c) Prepare the journal entry to record the accrual of interest and the amortization of the premium on December 31, 2011.;(d) Prepare the journal entry to record the payment of interest and the amortization of the premium on July 1, 2012, assuming no accrual of interest on June 30.;(e) Prepare the journal entry to record the accrual of interest and the amortization of the premium on December 31, 2012.

 

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