Lakeview Company completed the following two transactions. The annual accounting period ends December 31. On December 31, calculated the payroll, which indicates gross earnings for wages ($72,000), payroll deductions for income tax ($7,200), payroll deductions for FICA ($5,400), payroll deductions for American Cancer Society ($2,700), employer contributions for FICA (matching), and state and federal unemployment taxes ($630). Employees were paid in cash, but payments for the corresponding payroll deductions have not yet been made and employer taxes have not yet been recorded. Collected rent revenue of $5,850 on December 10 for office space that Lakeview rented to another business. The rent collected was for 30 days from December 12 to January 10 and was credited in full to Deferred Revenue. Required: 1. & 2. Make the journal entries to record payroll on December 31, the collection of rent on December 10 and adjusting journal entry on December 31. 3. Show how any of the liabilities related to these items should be reported on the company's balance sheet at December 31.
PART 1
Lakeview Company completed the following two transactions. The annual accounting period ends December 31.
- On December 31, calculated the payroll, which indicates gross earnings for wages ($72,000), payroll deductions for income tax ($7,200), payroll deductions for FICA ($5,400), payroll deductions for American Cancer Society ($2,700), employer contributions for FICA (matching), and state and federal
unemployment taxes ($630). Employees were paid in cash, but payments for the corresponding payroll deductions have not yet been made and employer taxes have not yet been recorded. - Collected rent revenue of $5,850 on December 10 for office space that Lakeview rented to another business. The rent collected was for 30 days from December 12 to January 10 and was credited in full to Deferred Revenue.
Required:
- 1. & 2. Make the journal entries to record payroll on December 31, the collection of rent on December 10 and adjusting
journal entry on December 31. - 3. Show how any of the liabilities related to these items should be reported on the company's
balance sheet at December 31.
Required 1 and 2
Make the journal entries to record payroll on December 31, the collection of rent on December 10 and adjusting journal entry on December 31. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Journal entry worksheet
- Record the wages expense, including payroll deductions. (Note: Enter debits before credits.)
Date General Journal Debit Credit
Dec 31 [ ] [ ] [ ]
- Record the payroll tax expense. (Note: Enter debits before credits.)
Date General Journal Debit Credit
Dec 31 [ ] [ ] [ ]
- Record the collection of 30 days' rent in advance amounting to $5,850. (Note: Enter debits before credits.)
Date General Journal Debit Credit
Dec 10 [ ] [ ] [ ]
- Record the
adjusting entry relating to rent. (Note: Enter debits before credits.)
Date General Journal Debit Credit
Dec 31 [ ] [ ] [ ]
Required 3
LAKEVIEW COMPANY
Balance Sheet (partial)
At December 31
[Assets OR Current Assets OR Current Liabilities OR Stockholders' Equity]
[ ] [ ]
[ ] [ ]
[ ] [ ]
[ ] [ ]
[ ] [ ]
[ ] [ ]
[Assets OR Current Assets OR Current Liabilities OR Stockholders' Equity [ $ Total ]
PART 2
On January 1, 2018, Loop Raceway issued 640 bonds, each with a face value of $1,000, a stated interest rate of 6 percent paid annually on December 31, and a maturity date of December 31, 2020. On the issue date, the market interest rate was 7 percent, so the total proceeds from the bond issue were $623,205. Loop uses the
Required:
- 1. Make a bond amortization schedule.
- 2-5. Make the journal entries to record the bond issue, the interest payments on December 31, 2018 and 2019, the interest and face value payment on December 31, 2020 and the bond retirement. Assume the bonds are retired on January 1, 2020, at a price of 97.
Required 1
Make a bond amortization schedule.
Changes During the Period Ending Bond Liability Balances
Period Cash Discount Interest Bonds Discount on Bonds Carrying
Ended Paid Amortized Expense Payable Payable Value
01/01/18 [ ] [ ] [ $ ? ] [ ] [ ] [ $ ? ]
12/31/18 [ ] [ ] [ $ ? ] [ ] [ ] [ $ ? ]
12/31/19 [ ] [ ] [ $ ? ] [ ] [ ] [ $ ? ]
12/31/20 [ ] [ ] [ $ ? ] [ ] [ ] [ $ ? ]
Required 2 to 5
Make the journal entries to record the bond issue, the interest payments on December 31, 2018 and 2019, the interest and face value payment on December 31, 2020 and the bond retirement. Assume the bonds are retired on January 1, 2020, at a price of 97. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Journal entry worksheet
- Record the issuance of 640 bonds at face value of $1,000 each for $623,205. (Note: Enter debits before credits.)
Date General Journal Debit Credit
Jan 01, 2018 [ ] [ ] [ ]
- Record the interest payment on December 31, 2018. (Note: Enter debits before credits.)
Date General Journal Debit Credit
Dec 31, 2018 [ ] [ ] [ ]
- Record the interest payment on December 31, 2019. (Note: Enter debits before credits.)
Date General Journal Debit Credit
Dec 31, 2019 [ ] [ ] [ ]
- Record the interest and face value payment on December 31, 2020. (Note: Enter debits before credits.)
Date General Journal Debit Credit
Dec 31, 2020 [ ] [ ] [ ]
- Record the retirement of the bonds at a quoted price of 97, assuming the bonds are retired on January 1, 2020. (Note: Enter debits before credits.)
Date General Journal Debit Credit
Jan 1, 2020 [ ] [ ] [ ]
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