Question

In: Accounting

On April 12, Hong Company agrees to accept a 60-day, 10%, $9,000 note from Indigo Company...

On April 12, Hong Company agrees to accept a 60-day, 10%, $9,000 note from Indigo Company to extend the due date on an overdue account. What is the journal entry that Indigo Company would make, when it records payment of the note on the maturity date? (Use 360 days a year.)

  • Debit Notes Payable $9,000; debit Interest Expense $225; credit Cash $9,225.

  • Debit Notes Payable $9,000; debit Interest Expense $150; credit Cash $9,150.

  • Debit Cash $9,150; credit Interest Revenue $150; credit Notes Receivable $9,000.

  • Debit Cash $9,150; credit Interest Revenue $150; credit Notes Payable $9,000.

  • Debit Notes Payable $9,000; credit Interest Expense $150, credit Cash $8,850.

Cantrell Company is required by law to collect and remit sales taxes to the state. If Cantrell has $11,000 of cash sales that are subject to an 7% sales tax, what is the journal entry to record the cash sales?

  • Debit Accounts Receivable $11,770; credit Sales $11,000; credit Sales Taxes Payable $770.

  • Debit Cash $11,000; credit Sales $11,000; and record the taxes when paid.

  • Debit Cash $11,000; credit Sales $10,230; credit Sales Taxes Payable $770.

  • Debit Cash $11,770; credit Sales $11,000; credit Sales Taxes Payable $770.

  • Debit Sales Taxes Payable $770; debit Cash $10,230; credit Sales $11,000.

Athena Company provides employee health insurance that costs $14,800 per month. In addition, the company contributes an amount equal to 5% of the employees' $148,000 gross salary to a retirement program. The entry to record the accrued benefits for the month would include a:

  • Debit to Employee Benefits Expense $22,200.

  • Debit to Employee Retirement Program Payable $7,400.

  • Debit to Medical Insurance Payable $14,800.

  • Debit to Payroll Taxes Expense $22,200.

  • Credit to Employee Benefits Expense $14,800.

Solutions

Expert Solution

1
Interest on note = 9000*10%*60/360= $150
Debit Notes Payable $9,000; debit Interest Expense $150; credit Cash $9,150.
Option B is correct
2
Sales tax due = 11000*7% = $770
Debit Cash $11,770; credit Sales $11,000; credit Sales Taxes Payable $770.
Option D is correct
3
Employee Retirement Program Payable = 148000*5%= $7400
Employee Benefits Expense = 14800+7400= $22200
Debit to Employee Benefits Expense $22,200.
Option A is correct

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