Question

1.

Proceeds from Notes Payable

On January 26, Nyree Co. borrowed cash from Conrad Bank by issuing a 45-day note with a face amount of $225,000. Assume a 360-day year.

a. Determine the proceeds of the note, assuming the note carries an interest rate of 8%.
$

b. Determine the proceeds of the note, assuming the note is discounted at 8%.

2.

Employee Net Pay

Lindsey Vater’s weekly gross earnings for the week ended March 9 were $800, and her federal income tax withholding was $128.96. Assuming the social security tax rate is 6% and Medicare tax is 1.5% of all earnings, what is Lindsey’s net pay? If required, round your answer to two decimal places.
$

3.

Journalize Period Payroll

The payroll register of Heritage Co. indicates $4,200 of social security withheld and $1,050 of Medicare tax withheld on total salaries of $70,000 for the period. Federal withholding for the period totaled $15,350. Retirement savings withheld from employee paychecks were $2,800 for the period.

Provide the journal entry for the period's payroll. If an amount box does not require an entry, leave it blank.

	Salaries Expense
	Social Security Tax Payable
	Medicare Tax Payable
	Employees Federal Income Tax Payable
	Retirement Savings Deductions Payable
	Salaries Payable

4.  

Journalize Payroll Tax

The payroll register of Heritage Co. indicates $4,200 of social security withheld and $1,050 of Medicare tax withheld on total salaries of $70,000 for the period. Earnings of $12,000 are subject to state and federal unemployment compensation taxes at the federal rate of 0.8% and the state rate of 5.4%.

Provide the journal entry to record the payroll tax expense for the period. If an amount box does not require an entry, leave it blank.

	Payroll Tax Expense
	Social Security Tax Payable
	Medicare Tax Payable
	State Unemployment Tax Payable
	Federal Unemployment Tax Payable

5.

Vacation Pay and Pension Benefits

Regling Company provides its employees vacation benefits and a defined benefit pension plan. Employees earned vacation pay of $40,000 for the period. The pension formula calculated a pension cost of $222,750. Only $185,000 was contributed to the pension plan administrator.

(a) Provide the journal entry for the vacation pay. If an amount box does not require an entry, leave it blank.

	Vacation Pay Expense
	Vacation Pay Payable

(b) Provide the journal entry for the pension benefit. If an amount box does not require an entry, leave it blank.

	Pension Expense
	Cash
	Unfunded Pension Liability

Answer 1

Solution:

Part a -

Proceeds from note payable means the inflow of cash borrowed by a company.

It is only mentioned that the note carries an interest rate of 8%, it means on the date of matrurity Nyree Co. is liable to pay face value of notes plus interest for 45 days at 8%.

So the initial proceeds (i.e. cash amount borrowed) by Nyree Co. of the note is the face value of note $225,000

Part b -

Face value of notes payable = $225,000

Days to maturity = 45 days

The note is discounted at 8%, it means the proceeds from notes payable is less than the face value because note is discounted at 8%.

Proceeds from Notes Payable = Face Value $225,000 – Discount on Notes ($225,000 * 8% * 45 / 360)

= $225,000 - $2,250

= $222,750

In this case, the proceeds of note would be $222,750

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