Precision Castparts, a manufacturer of processed engine parts in the automotive

Question

Precision Castparts, a manufacturer of processed engine parts in the automotive and airline industries, borrows $39.1 million cash on October 1, 2018, to provide working capital for anticipated expansion. Precision signs a one-year, 9% promissory note to Midwest Bank under a prearranged short-term line of credit. Interest on the note is payable at maturity. Each firm has a December 31 year-end. Prepare the journal entries on October 1, 2018, to record the issuance of the note

Emily Turnbull, president of Aerobic Equipment Corporation, is concerned about her employees’ well-being. The company offers its employees free medical, dental, and life insurance coverage. It also matches employee contributions to a voluntary retirement plan up to 6% of their salaries. Assume that no employee’s cumulative wages exceed the relevant wage bases. Payroll information for the biweekly payroll period ending January 24 is listed below.

  Wages and salaries $ 1,700,000      
  Employee contribution to voluntary retirement plan 85,000      
  Medical insurance premiums paid by employer 34,000      
  Dental insurance premiums paid by employer 11,900      
  Life insurance premiums paid by employer 5,950      
  Federal and state income tax withheld 365,500      
  FICA tax rate 7.65 %
  Federal and state unemployment tax rate

1., 2. & 3. Record the necessary journal entries. 6.20 %

Emily Turnbull, president of Aerobic Equipment Corporation, is concerned about her employees’ well-being. The company offers its employees free medical, dental, and life insurance coverage. It also matches employee contributions to a voluntary retirement plan up to 6% of their salaries. Assume that no employee’s cumulative wages exceed the relevant wage bases. Payroll information for the biweekly payroll period ending January 24 is listed below.

  Wages and salaries $ 1,700,000      
  Employee contribution to voluntary retirement plan 85,000      
  Medical insurance premiums paid by employer 34,000      
  Dental insurance premiums paid by employer 11,900      
  Life insurance premiums paid by employer 5,950      
  Federal and state income tax withheld 365,500      
  FICA tax rate 7.65 %
  Federal and state unemployment tax rate
1., 2. & 3. Record the necessary journal entries.


6.20 %

Emily Turnbull, president of Aerobic Equipment Corporation, is concerned about her employees’ well-being. The company offers its employees free medical, dental, and life insurance coverage. It also matches employee contributions to a voluntary retirement plan up to 6% of their salaries. Assume that no employee’s cumulative wages exceed the relevant wage bases. Payroll information for the biweekly payroll period ending January 24 is listed below.

  Wages and salaries $ 1,700,000         Employee contribution to voluntary retirement plan 85,000         Medical insurance premiums paid by employer 34,000         Dental insurance premiums paid by employer 11,900         Life insurance premiums paid by employer 5,950         Federal and state income tax withheld 365,500         FICA tax rate 7.65 %   Federal and state unemployment tax rate 6.20 % 1., 2. & 3. Record the necessary journal entries.

Explanation / Answer

a) Notes payable for Precision Castparts October 1, 2018 Cash $39,100,000             Notes Payable $39,100,000 (Issuance of notes payable) December 31, 2018 Interest Expense ($39.1 million x 9% x 3/12) $879,750                      Interest Payable $879,750 ( Interest expense incurred, but not paid ) September 30, 2019 Notes Payable $39,100,000 Interest Expense ($39.1 million x 9% x 9/12) $2,639,250 Interest Payable ($39.1 million x 9% x 3/12) $879,750                         Cash $42,619,000 ( Payment of notes payable and interest )

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