Financial Accounting (ACC 202)

Instructor: Sidra Salman

Assignment 1

Class ____________Sec tion ____ Spring Term 2021

Name:_____________________________ Date:_______________________________

1. On May 15, Maynard Co. borrowed cash from Texas Bank by issuing a 60-day note with
a face amount of $100,000.
a. Determine the proceeds of the note, assuming that the note carries an interest rate of 6%.
b. Determine the proceeds of the note, assuming that the note is discounted at 6%.

2. Marsha Mellow’s weekly gross earnings for the present week were $1,250. Mellow has one
exemption. Using the wage bracket withholding table in Exhibit 2 with a $75 standard withholding
allowance for each exemption, what is Mellow’s federal income tax withholding?

3. Tam Worldly’s weekly gross earnings for the week ended April 22 were $2,000, and her federal
income tax withholding was $372.02. Assuming that the social security rate is 6%and Medicare is
1.5% of all earnings, what is Worldly’s net pay?

4. The payroll register of Longboat Co. indicates $5,400 of social security withheld and $1,350 of
Medicare tax withheld on total salaries of $90,000 for the period. Retirement savings withheld
from employee paychecks were $5,400 for the period. Federal withholding for the period totaled
$17,820.
Provide the journal entry for the period’s payroll.

5. The payroll register of Longboat Co. indicates $5,400 of social security withheld and $1,350 of
Medicare tax withheld on total salaries of $90,000 for the period. Earnings of $10,000 are subject
to state and federal unemployment compensation taxes at the federal rate of 0.6% and the state
rate of 5.4%.
Provide the journal entry to record the payroll tax expense for the period.

6. Ramsey Company issues an $800,000, 45-day note to Buckner Company for merchandise
inventory. Buckner discounts the note at 7%.
a. Journalize Ramsey’s entries to record:
1. the issuance of the note.
2. the payment of the note at maturity.
b. Journalize Buckner’s entries to record:
1. the receipt of the note.
2. the receipt of the payment of the note at maturity.
7. Gmeiner Co. had the following current assets and liabilities on December 31 of two recent
years:
Current Year Previous Year
Current assets:
Cash $ 486,000 $ 500,000
Accounts receivable 210,000 200,000
Inventory 375,000 350,000
Total current assets $1,071,000 $1,050,000
Current liabilities:
Current portion of long-term debt $145,000 110,000
Accounts payable 175,000 150,000
Accrued and other current liabilities 260,000 240,000
Total current liabilities $580,000 $500,000

a. Determine the quick ratio for December 31 of both years.

b.Interpret the change in the quick ratio between the two balance sheet dates.