(Solution) -ACC 205 Week 4 Assignment Student Guidance Report Updated
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ACC 205 Week 4 Assignment Student Guidance Report
Chapter 7 Exercise 2 and 4
2. Accrued liability: current portion of long-term debt. On July 1, 20X1, Hall Company borrowed $225,000 via a long-term loan. Terms of the loan require that Hall pay interest and $75,000 of principal on July 1, 20X2, 20X3, and 20X4. The unpaid balance of the loan accrues interest at the rate of 10% per year. Hall has a December 31 year-end.
a. Compute Hall's accrued interest as of December 31, 20X1.
b. Present the appropriate balance sheet disclosure for the accrued interest and the current and long-term portion of the outstanding debt as of December 31, 20X1.
c. Repeat parts (a) and (b) using a date of December 31, 20X2, rather than December 31, 20X1. Assume that Hall is in compliance with the terms of the loan agreement.
4. Payroll accounting. Assume that the following tax rates and payroll information pertain to Brookhaven Publishing:
5. Social Security taxes: 6% on the first $55,000 earned
6. Medicare taxes: 1.5% on the first $130,000 earned
7. Federal income taxes withheld from wages: $7,500
8. State income taxes: 5% of gross earnings
9. Insurance withholdings: 1% of gross earnings
10. State unemployment taxes: 5.4% on the first $7,000 earned
11. Federal unemployment taxes: 0.8% on the first $7,000 earned
The company incurred a salary expense of $50,000 during February. All employees had earned less than $5,000 by month-end.
a. Prepare the necessary entry to record Brookhaven's February payroll that will be paid on March 1.
b. Prepare the journal entry to record Brookhaven's payroll tax expense.