1. Hamilton Company purchased a vehicle at a cost of $60,000 On June 1, 2012 by putting a down payment of $20,000 and financing the remainder during a 2 year period. The company pays an interest rate of 6% per year. The balance due will be paid in 4 installments of $10,000 each every 6 months plus interest due. Interest is charged on the balance owed after each installment.
a. Record the purchase of the vehicle on June 1st.
b. Record the first installment payment plus interest on the loan.
c. Record any adjusting entries at year-end 12/31/12
d. Record the second installment payment plus interest.
2. McCormack Co. has 20 employees who are paid hourly. All employees receive $20/hour compensation and in addition accrue vacation of 1 day per every 3 months at the rate of $20/hr. At month end the total hours worked by all employees is 200 hours. All employees contribute 7.65% of their wages towards social security and Medicare (FICA). In addition the company matches the same percentage every month. The company also withheld federal taxes which amounted to $850, and paid $250 in FUTA and $120 in SUTA. In addition, the company accrued 10 vacation days in total for the month at the current rate.
a. Record the journal entry to record the payment of salaries to employees.
b. Record the accrual of vacation days.
c. Record the employer liability for the employer taxes.