Mission Company Has Three Employees

Mission Company Has Three Employees Mission Company Has Three Em

Mission Company has three employees: The company is subject to the following taxes: What is Mission Company's amount for payroll taxes for Cain? $267.75, $1,705.95, $484.75, $2,241.45, $1,973.70. What is Mission Company's amount for payroll taxes for Clark? $1,814.35, $812.20, $6,234.75, $946.35, $1,002.15. On January 1, 2010, a company issued and sold an $850,000, 6%, 5-year bond payable and received proceeds of $825,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The journal entry to record the first interest payment is: _.unknown _.unknown _.unknown _.unknown _.unknown _.unknown _.unknown _.unknown _.unknown _.unknown _.unknown _.unknown _.unknown _.unknown _.unknown.

Paper For Above instruction

Introduction

This paper explores several accounting and payroll concepts centered around the financial obligations and procedures of a hypothetical company, Mission Company. The discussion focuses on payroll taxes for employees named Cain and Clark, as well as the accounting treatment of bonds payable issued by a different entity. The aim is to clarify how payroll taxes are calculated, and how bond amortization and interest payments are recorded in financial statements. These topics are critical in understanding the financial management and reporting responsibilities of modern businesses.

Payroll Taxes for Employees Cain and Clark

Payroll taxes are mandatory contributions that employers are legally obliged to withhold and remit to government agencies. These taxes generally include Social Security tax, Medicare tax, unemployment taxes, and any other applicable local or state taxes. The calculation of payroll taxes involves determining the gross wages of the employees and applying the appropriate tax rates.

For Cain, the payroll taxes varied in the options provided, with amounts such as $267.75, $1,705.95, $484.75, $2,241.45, and $1,973.70. The correct amount depends on Cain’s gross wages and the applicable employer payroll tax rates. Typically, Social Security taxes are 6.2% on wages up to a certain limit, and Medicare taxes are 1.45% on all wages. Additional unemployment taxes and other obligations vary by jurisdiction. Assuming Cain’s gross wages and the rate structure, the most reasonable estimate, as per typical payroll tax computations, is approximately $484.75, which aligns with standard calculations for moderate wages.

Similarly, Clark’s payroll taxes are listed as $1,814.35, $812.20, $6,234.75, $946.35, and $1,002.15. Given the significant variance, the most plausible figure based on typical payroll obligations is around $1,002.15, if Clark's gross wages are higher. These calculations involve multiplying wages by the combined applicable tax rates and including any additional employer-specific taxes.

In practical accounting, payroll taxes are accrued in the period wages are earned and are recorded as liabilities in the company's balance sheet. The employer’s contributions are in addition to the gross wages paid to employees and must be remitted periodically to the tax authorities.

Bond Issuance and Amortization

The second scenario involves a company issuing bonds payable. On January 1, 2010, the company issued a bond with a face value of $850,000 at a 6% annual interest rate, with a term of five years. The proceeds received were $825,000, indicating a discount of $25,000 ($850,000 - $825,000). Interest is paid semi-annually on June 30 and December 31. Because the company uses the straight-line method for amortization, the discount is amortized evenly over the life of the bond.

The initial journal entry at issuance records cash received and the discount on bonds payable as a contra-liability. The subsequent interest payment involves recognizing interest expense and amortizing part of the discount. Under the straight-line method, interest expense each period equals the cash interest paid plus equal portions of the discount amortization.

For the first interest payment, the cash interest is calculated as:

$850,000 * 6% / 2 = $25,500 each half-year period.

The total discount to be amortized over 5 years (or 10 periods) is $25,000, so each period's amortization is $2,500 ($25,000 / 10).

Therefore, the journal entry to record the first interest payment would include:

- Debit to interest expense: $25,500 + $2,500 = $28,000,

- Credit to cash: $25,500,

- Credit to discount on bonds payable: $2,500.

The detailed journal entry:

Debit: Interest Expense $28,000

Credit: Cash $25,500

Credit: Discount on Bonds Payable $2,500

This process continues for each period, accumulating interest expense and gradually amortizing the discount, which affects the bond's carrying amount over time.

Conclusion

Understanding payroll taxes entails calculating employee-specific contributions based on gross wages and applicable rates, including Social Security, Medicare, and unemployment taxes. Proper recording ensures accurate financial reporting and compliance with tax regulations. The bond amortization process, particularly under the straight-line method, involves systematic expense recognition and adjustment of bond payable accounts. Accurate journal entries are vital for providing a true view of a company's financial position and obligations. Mastery of these topics is essential for accounting professionals managing payroll and debt transactions, ensuring transparency and regulatory adherence.

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