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On March 1, John Jay Company borrows

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5 problems

Problem 1
On March 1, John Jay Company borrows $150,000 from Ottawa State Bank by signing a 6-month, 8%, interest-bearing note.

Instructions: Prepare in journal form, without explanations, the entries below associated with the note payable on the books of John Jay Company.

(a) Prepare the entry on March 1 when the note was issued.
(b) Prepare any adjusting entries necessary on June 30 in order to prepare the semi-annual financial statements. Assume no other interest accrual entries have been made.
(c) Prepare the adjusting entry at August 31 to accrue interest.
(d) Prepare the entry to record payment of the note at maturity.

Problem 2
John Adams Company purchased equipment on January 1, 2011 for $90,000. It is estimated that the equipment will have a $5,000 salvage value at the end of its 5-year useful life. It is also estimated that the equipment will produce 100,000 units over its 5-year life.
Instructions: Answer the following independent questions.

1. Compute the amount of depreciation expense for the year ended December 31, 2011, using the straight-line method of depreciation.
2. If 16,000 units of product are produced in 2011 and 24,000 units are produced in 2012, what is the book value of the equipment at December 31, 2012? The company uses the units-of-activity depreciation method.
3. If the company uses the double-declining-balance method of depreciation, what is the balance of the Accumulated Depreciation, Equipment account at December 31, 2013?

Problem 3
Ellen Trek's regular hourly wage is $16 an hour. She receives overtime pay at the rate of time and a half. The FICA tax rate is 8%. Ellen is paid Ellenry two weeks. For the first pay period in January, Ellen worked 86 hours of which 6 were overtime hours. Ellen's federal income tax withholding is $350 and her state income tax withholding is $110. Ellen has authorized that $50 be withheld from her check each pay period for savings bonds.

Instructions: Compute Ellen Trek's gross earnings and net pay for the pay period showing each payroll deduction in arriving at net pay.

Problem 4
The Flip and Flop partnership reports net income of $50,000. Partner salary allowances are Flip $18,000 and Flop $12,000. Any remaining income is shared 60:40.

Instructions: Determine the amount of net income allocated to each partner.

Problem 5
Partridge Bookstore had 500 units on hand at January 1, costing $18 each. Purchases and sales during the month of January were as follows:
Date Purchases Sales
Jan. 14 375 @ $28
17 250 @ $20
25 250 @ $22
29 260 @ $32
Partridge does not maintain perpetual inventory records. According to a physical count, 365 units were on hand at January 31. Calculate the cost of the inventory at January 31, under the LIFO method.

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