6 accounting questions

P1. Coyote Construction, Inc. employs 40 individuals who work 8 hours a day and are paid hourly. Each employee earns one day paid sick leave and one day paid vacation a month if he or she works full-time in the month. Vacations earned in one year can be used in the following years while sick leaves can be used as they are earned. The following information pertains to vacation earned in 2017 and used in 2019.

Vacations Vacations Vacation earned

Earned in 2018 earned in 2018 and used in 2019 in 2019

400 days 300days 420 days

The average pay rates are $15/hour in 2018 and $18/hour in 2019.

Instructions: prepare any necessary journal entries for

Vacations earned in 2018.

Vacations earned in 2018 but used in 2019.

Vacations earned in 2019

P2. The following information pertains to the payrolls of COYOTE Company for November 2019:

Employees Wage earned Wage earned Federal Income State/local

By 10/31/2019 in November 2019 Tax Income Taxes

Jane $115,000 $20,000 $1,500 $650

Tom 70,000 10,000 500 250

Bill 6,000 1,500 0 0

Actual state unemployment tax rate is 4%, while the federal unemployment tax rate is 1%. The taxable income limit for social security tax is $120,000/person, year, while the taxable income limit of SUTA and FUTA is $7,000/ person, year.

Instructions: Prepare the necessary journal entries for November payrolls of COYOTE Company if salaries and wages are paid in cash after withholding all payroll taxes and dues.

P3. Hawk, Inc. sold 10 heavy production machines with 2-year warranties for $400,000 each in 2019. At the end of 2019, it was estimated that the total warranty costs be $50,000 for the machines sold in 2019. Actual warranty costs incurred in 2019 were $27,000 and will be $15,000, and $12,000 in 2020 and 2021, respectively.

Instructions: Prepare any necessary journal entries for

1) The estimated total warranty costs on 12/31/2019,

2) The actual warranty costs incurred in 2019, 2020, and 2021.

P4. Coyote sold 20,000 shares of $1,000 par value, 8%, 10-year debenture bonds on 1/1/2018. The bonds will pay interests on 12/31 of each year. The market interest rate was 4% as of 1/1/2018. Coyote retired these bonds for $19,500,000 on 1/1/2020.

Instructions: prepare any necessary journal entries for the followings using the effective interest method.

The issuance of the bonds.

Interest expense accrued in 2018 and 2019.

Retirement of the bonds on 1/1/2020.

P5. The following information pertains to stock transactions of Hawk, Inc. during 2019.

On 1/11/2019, Hawk issued 1,000,000 shares of common stock for $110/share. Its par is $100/share.

On 7/1/2019, Hawk reacquired 150,000 shares of its common stock at $96/share.

On 7/15/2019, Hawk reacquired 80,000 shares of its common stock at $98/share.

On 8/1/2019, Hawk sold 90,000 shares of the treasury stock for $101/share.

On 11/1/2019, Hawk sold 120,000 shares of the stock reacquired for $90/share.

On 12/31/2019, Hawk retired the remaining 20,000 shares of the stock reacquired.

Instructions: Prepare any necessary journal entries for the above transactions using the FIFO flow

assumption and

the cost method

the par value method

P6. On December 31, 2019, Hawk Company presented the following data.

Net income after income tax and interest expenses $2,400,000.

Common stock (C/S)with $100 par:

# of shares outstanding as of 1/1/2019 600,000

# of shares issued for cash on 7/1/2019 400,000

# of shares reacquired on 10/1/2019 (Tresury stocks) 120,000

200,000 shares of 3% Convertible Preferred stock (P/S) with $50/share par value.

Conversion ratio to C/S = 2 for 1; i.e., two shares of P/S will become one share of C/S

The income tax rate is 30%.

Hawk issued 3,000 shares of $1,000 par value, 2%, 5 year convertible bonds for $1,000 per share on January 1, 2019. The interests are payable annually at the end of each year. Each $1,000 bond can be converted to 10 shares of common stock within five years from 1/1/2019.

None of these convertible securities have been converted to date.

Hawk granted call options to purchase 10,000 shares of common stock for $80/share to its managers on 1/1/2019 when the option value were $5,000. None of these options have been exercised to date. The average market price of common stock was $120/share in 2019.

Instructions:

Compute Simple EPS for 2019.

Compute Diluted EPS for 2019.