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ACC 291 Week 3 WilyePlus



ACC 291 Week 3 WilyePlus Question 1 During the month of March, Olinger Company’s employees earned wages of $80,000. Withholdings related to these wages were $6,120 for Social Security (FICA), $9,375 for federal income tax, $3,875 for state income tax, and $500 for union dues. The company incurred no cost related to these earnings for federal unemployment tax but incurred $875 for state unemployment tax. Question 2 On August 1, 2014, Ortega Corporation issued $967,200, 8%, 10-year bonds at face value. Interest is payable annually on August 1. Ortega’s year-end is December 31. Question 3 Romine Company issued $487,300 of 9%, 10-year bonds on January 1, 2014, at face value. Interest is payable annually on January 1. Question 4 Cole Corporation issued $537,000, 9%, 22-year bonds on January 1, 2014, for $449,192. This price resulted in an effective-interest rate of 11% on the bonds. Interest is payable annually on January 1. Cole uses the effective-interest method to amortize bond premium or discount Question 5 Nance Co. receives $349,100 when it issues a $349,100, 7%, mortgage note payable to finance the construction of a building at December 31, 2014. The terms provide for semiannual installment payments of $18,981 on June 30 and December 31 Question 6 The financial statements of Tootsie Roll are presented below Question 7 The financial statements of The Hershey Company and Tootsie Roll are presented below Question 8 In recent years, Farr Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below Question 9 Wempe Co. sold $3,463,000, 10%, 10-year bonds on January 1, 2014. The bonds were dated January 1, 2014, and pay interest on January 1. The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually Question 10 Grace Herron has just approached a venture capitalist for financing for her new business venture, the development of a local ski hill. On July 1, 2013, Grace was loaned $258,000 at an annual interest rate of 8%. The loan is repayable over 5 years in annual installments of $64,618, principal and interest, due each June 30. The first payment is due June 30, 2014. Grace uses the effective-interest method for amortizing debt. Her ski hill company’s year-end will be June 30 Question 11 Ratzlaff Company issues €2 million, 10-year, 8% bonds at 97, with interest payable on July 1 and January 1.


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