Part 1: A borrower has two alternatives for a loan: (1) issue a $185,000, 60-day,...
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Accounting
Part 1:
A borrower has two alternatives for a loan: (1) issue a $185,000, 60-day, 4% note or (2) issue a $185,000, 60-day note that the creditor discounts at 4%.
a. Compute the amount of the interest expense for each option.
b. Determine the proceeds received by the borrower in each situation.
c. Which alternative is more favorable to the borrower? Explain.
Part 2:
The payroll register for Gentry Company for the week ended December 17 indicated the following:
Salaries $786,000
Social security tax withheld $48,732
Medicare tax withheld $11,397
Federal income tax withheld $93,200
In addition, state and federal unemployment taxes were calculated at the rate of 5.4% and 0.6%, respectively, on $59,000 of salaries.
a. Journalize the entry to record the payroll for the week of December 17.
b. Journalize the entry to record the payroll tax expense incurred for the week of December 17.
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