Exercise 14-39 (Algo) Recording debt under the Payroll Protection Program; loan not forgiven; COVID-19 [ LO14-3] Hope Still, chief executive of Great Divide Technologies (GDT), a state-certified aircraft repair company, worked with her local bank to get a $330,000 loan under the Paycheck Protection Program in early May of 2020 that allowed her to keep paying her 19 employees. The loan would be fully forgiven if GDT uses at least 60% of the funds for payroll costs and the remainder for interest on mortgages, rent, and utilities. Otherwise, the loan plus 1% accrued annual interest must be repaid after two years. The company recorded the loan with a $330,000 credit to note payable. Required: Prepare the appropriate journal entry GDT would record when, after two years, it's determined that the conditions for debt forgiveness will not be met. Assume that accrued interest had been recorded with debits to interest expense and credits to the note payable. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

Exercise 14-39 (Algo) Recording debt under the Payroll Protection Program; loan not forgiven; COVID-19 [ LO14-3] Hope Still, chief executive of Great Divide Technologies (GDT), a state-certified aircraft repair company, worked with her local bank to get a $330,000 loan under the Paycheck Protection Program in early May of 2020 that allowed her to keep paying her 19 employees. The loan would be fully forgiven if GDT uses at least 60% of the funds for payroll costs and the remainder for interest on mortgages, rent, and utilities. Otherwise, the loan plus 1% accrued annual interest must be repaid after two years. The company recorded the loan with a $330,000 credit to note payable. Required: Prepare the appropriate journal entry GDT would record when, after two years, it's determined that the conditions for debt forgiveness will not be met. Assume that accrued interest had been recorded with debits to interest expense and credits to the note payable. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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P13.3 (LO 1) (Payroll Tax Entries) Cedarville Company pays its office employee payroll weekly. Below is a partial list of employees and their payroll data for August. Because August is their vacation period, vacation pay is also listed. Earnings to Weekly Vacation Pay to Be July 31 Employee Pay Received in August Mark Hamill $4,200 $200 Karen Robbins 3,500 150 $300 Brent Kirk 2,700 110 220 Alec Guinness 7,400 250 Ken Sprouse 8,000 330 660 Assume that the income tax withheld is 10% of wages. Union dues withheld are 2% of wages. Vacations are taken the second and third weeks of August by Robbins, Kirk, and Sprouse. The Social Security rate is 8% on employee and employer. Instructions Make the journal entries necessary for each of the four August payrolls. The entries for the payroll and for the company's liability are made separately. Also make the entry to record the monthly payment of payroll liabilities.
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