ACC291 assignment (Graded A+) - use as a guide only - 19175

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According to the accountant of Ulner Inc., its payroll taxes for the week were as follows: $198.40 for FICA taxes, $19.84 for federal unemployment taxes, and $133.92 for state unemployment taxes.

Record accrual of payroll taxes.

(SO 3)



Journalize the entry to record the accrual of the payroll taxes.




Jim Thome has prepared the following list of statements about bonds.


Bonds are a form of interest-bearing notes payable.


When seeking long-term financing, an advantage of issuing bonds over issuing common stock is that stockholder control is not affected.


When seeking long-term financing, an advantage of issuing common stock over issuing bonds is that tax savings result.


Secured bonds have specific assets of the issuer pledged as collateral for the bonds.


Secured bonds are also known as debenture bonds.


Bonds that mature in installments are called term bonds.


A conversion feature may be added to bonds to make them more attractive to bond buyers.


The rate used to determine the amount of cash interest the borrower pays is called the stated rate.


Bond prices are usually quoted as a percentage of the face value of the bond.


The present value of a bond is the value at which it should sell in the marketplace.

Evaluate statements about bonds.

(SO 4)



Identify each statement above as true or false. If false, indicate how to correct the statement.






Hrabik Corporation issued $600,000, 9%, 10-year bonds on January 1, 2011, for $562,613. This price resulted in an effective-interest rate of 10% on the bonds. Interest is payable semiannually on July 1 and January 1. Hrabik uses the effective-interest method to amortize bond premium or discount.

Prepare entries for issuance of bonds, payment of interest, and amortization of discount using effective-interest method.

(SO 5, 10)



Prepare the journal entries to record the following. (Round to the nearest dollar.)


The issuance of the bonds.


The payment of interest and the discount amortization on July 1, 2011, assuming that interest was not accrued on June 30.


The accrual of interest and the discount amortization on December 31, 2011.




The intangible assets section of Time Company at December 31, 2011, is presented below.



Patent ($100,000 cost less $10,000 amortization)

$ 90,000

Copyright ($60,000 cost less $24,000 amortization)





The patent was acquired in January 2011 and has a useful life of 10 years. The copyright was acquired in January 2008 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2012.



Jan. 2

Paid $45,000 legal costs to successfully defend the patent against infringement by another company.


Developed a new product, incurring $230,000 in research and development costs. A patent was granted for the product on July 1. Its useful life is equal to its legal life.

Sept. 1

Paid $125,000 to an Xgames star to appear in commercials advertising the company's products. The commercials will air in September and October.

Oct. 1

Acquired a copyright for $200,000. The copyright has a useful life of 50 years.


Prepare entries to record transactions related to acquisition and amortization of intangibles; prepare the intangible assets section.

(SO 8, 9)




Prepare journal entries to record the transactions above.


Prepare journal entries to record the 2012 amortization expense for intangible assets.

Amortization Expense—

  Patents $15,000;

  Amortization Expense—

  Copyrights $7,000


Prepare the intangible assets section of the balance sheet at December 31, 2012.


Prepare the note to the financials on Time's intangibles as of December 31, 2012.

Total intangible assets,



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