In Gar’ s December 31, year 1 balance sheet, the current liabilities total was
119. On July 1, year 1, Cody Company obtained a $ 2,000,000, 180- day bank loan at an annual rate of 12 %. The loan agreement requires Cody to maintain a $ 400,000 compensating balance in its checking account at the lending bank. Cody would otherwise maintain a balance of only $ 200,000 in this account. The checking account earns interest at an annual rate of 6 %. Based on a 360-day year, the effective interest rate on the borrowing is
120. For the week ended June 30, year 1, Free Co. paid gross wages of $ 20,000, from which federal income taxes of $ 2,500 and FICA were withheld. All wages paid were subject to FICA tax rates of 7 % each for employer and employee. Free makes all payroll-related disbursements from a special payroll checking account. What amount should Free have deposited in the payroll checking account to cover net payroll and related payroll taxes for the week ended June 30, year 1?
121. A company receives an advance payment for special-order goods that are to be manufactured and delivered within 6 months. The advance payment should be reported in the company’ s balance sheet as a
122. On December 31, year 1, Key Co. received two $ 10,000 noninterest-bearing notes from customers in exchange for services rendered. The note from Alpha Co., which is due in nine months, was made under customary trade terms, but the note from Omega Co., which is due in two years, was not. The market interest rate for both notes at the date of issuance is 8 %. The present value of $ 1 due in nine months at 8 % is. 944. The present value of $ 1 due in two years at 8 % is. 857. At what amounts should these two notes receivable be reported in Key’ s December 31, year 1 balance sheet?