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P10-6A On September 1, 2021, Evansville Lumber Company issued $80 million in 20-year, 10 percent bonds payable

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P10-6A On September 1, 2021, Evansville Lumber Company issued $80 million in 20-year, 10 percent bonds payable. Interest is payable semiannually on March 1 and September 1. Bond discounts and premiums are amortized at each interest payment date and at year-end. The company’s fiscal year ends at December 31. Instructions a. Make the necessary adjusting entries at December 31, 2021, and the journal entry to record the payment of bond interest on March 1, 2022, under each of the following assumptions. 1. The bonds were issued at 98. (Round to the nearest dollar.) 2. The bonds were issued at 101. (Round to the nearest dollar.) b. Compute the net bond liability at December 31, 2022, under assumptions 1 and 2. (Round to the nearest dollar.) c. Under which of these assumptions, 1 or 2, would the investor’s effective rate of interest be higher? Explain. 10-3A During the fiscal year ended December 31, Swanson Corporation engaged in the following trans-actions involving notes payable. Aug. 6 Borrowed $12,000 from Maple Grove Bank, signing a 45-day, 12 percent note payable. Sept. 16 Purchased office equipment from Seawald Equipment. The invoice amount was $18,000, and Seawald agreed to accept, as full payment, a 10 percent, 3-month note for the invoice amount. Sept. 20 Paid Maple Grove Bank the note plus accrued interest. Nov. 1 Borrowed $250,000 from Mike Swanson, a major corporate stockholder. The corporation issued Swanson a $250,000, 15 percent, 90-day note payable. Dec. 1 Purchased merchandise inventory in the amount of $5,000 from Gathman Corporation. Gathman accepted a 90-day, 14 percent note as full settlement of the purchase. Swanson Corporation uses a perpetual inventory system. Dec. 16 The $18,000 note payable to Seawald Equipment matured today. Swanson paid the accrued interest on this note and issued a new 30-day, 16 percent note payable in the amount of $18,000 to replace the note that matured. Instructions a. Prepare journal entries (in general journal form) to record these transactions. Use a 360day year in making the interest calculations. b. Prepare the adjusting entry needed at December 31, prior to closing the accounts. Use one entry for all three notes (round to the nearest dollar). c. Provide a possible explanation why the new 30-day note payable to Seawald Equipment pays 16 percent interest instead of the 10 percent rate charged on the September 16 note. 10-5 Spirit Corporation reported the following payroll-related costs for the month of February. Gross pay (wages expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $250,000 Social Security and Medicare taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,125 Federal and state unemployment taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,500 Workers’ compensation insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,500 Group health and life insurance benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 Employee pension plan benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,875 Total payroll costs for February. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $326,000 Spirit’s insurance premiums for workers’ compensation and group health and life insurance were paid for in a prior period and recorded initially as prepaid insurance expense. Withholdings from employee wages in February were as follows. State income tax withholdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,875 Federal income tax withholdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,000 Social Security and Medicare tax withholdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,125 a. Record Spirit’s gross wages, employee withholdings, and employee take-home pay for February. b. Record Spirit’s payroll tax expense for February. c. Record Spirit’s employee benefit expenses for February. d. Do the amounts withheld from Spirit’s employees represent taxes levied on Spirit Corpora-tion? Explain.