Question

1. Roseland Design borrowed $700,000 on a 90-day note from CorpOne Funding Company. CorpOne discounts the note at 8%. (Assume a 360-day year is used for interest calculations.) (a) Journalize Roseland's entries to record: a. The issuance of the note. b. The payment of the note at maturity.

Answer 1

Answer -

1. Answer -

(a)

	Account titles and explanation	Debit	Credit
a.	Cash ($700000 - $14000)	$686000
	Interest expense	$14000
	Notes payable		$700000
b.	Note payable	$700000
	Cash		$700000

Calculation:

Interest expense = $700000 * 8% * (90 / 360 days) = $14000

(b)

	Account titles and explanation	Debit	Credit
a.	Notes receivable	$700000
	Cash ($700000 - $14000)		$686000
	Interest revenue		$14000
b.	Cash	$700000
	Notes receivable		$700000

Calculation:

Interest revenue = $700000 * 8% * (90 / 360 days) = $14000

2. Answer -

(a)

Here,

Employee worked during the week = 60 hours

An employee earns $40 per hour and 1.5 times that rate for all hours in excess of 40 hours per week

So,

Regular pay = 40 hours * $40

Regular pay = $1600

And

Overtime pay = (60 hours - 40 hours) * $40 * 1.5

Overtime pay = $1200

Now

Gross pay = Regular pay + Overtime pay

Gross pay = $1600 + $1200

Gross pay = $2800

(b)

Here,

Gross pay = $2800

Social security tax = $168 (6% * $2800)

Medicare tax = $42 (1.5% * $2800)

Federal income tax to be withheld = $614

Gross pay		$2800
Less:
Federal income tax withhold	$614
Social security tax	$168
Medicare tax	$42
		($824)
Net pay		$1976

Net pay = $1976