Question

On February 16, Richmond purchased $24,000 of supplies from ABC Supplies, with the full amount due on March 31. On February 26, Richmond paid 25% of the purchased merchandise (Transaction A). On March 31, Richmond negotiated a payment extension with ABC and signed a 1-year, 10% note for the remaining balance. On April 30, Richmond borrowed $300,000 on a 10-month, 8% interest-bearing note. On June 4, Richmond purchased $78,000 of merchandise, with the full amount due on June 30. On June 24, Richmond paid for the purchased merchandise (Transaction E). On August 19, Richmond received a $22,000 deposit from Haywood, Inc., against a total selling price of $220,000 for services to be performed. On October 15, Richmond paid quarterly installments of social security, Medicare, and individual income tax withholdings. The amounts paid represent both the employee and employer shares for social security and Medicare. The specific amounts are as follows: Social Security taxes withheld $185,000, Medicare taxes withheld $43,266, and federal income taxes withheld $319,000. On December 15, Richmond completed the services ordered by Haywood on August 19. Haywood's remaining balance of $198,000 is due on January 31.

A) $24,000
B) 25%
C) 1-year, 10%
D) $78,000

Answer 1

This question entails business transactions and requires understanding of purchasing, payments, loans, interest calculation, and tax withholdings. It addresses various examples from purchases and negotiations, to loans and tax payments, used in real-world business accounting practices.

Step-by-step explanation:

The question posed is related to business transactions involving purchases, loans, and the recording of financial operations. The question subjects include the calculation of the amount paid after a certain percentage discount, the creation of a note payable with interest, negotiation of the terms of financial agreements, and the recording of deposits and tax withholdings. Mathematics, particularly algebra and accounting principles, are required to solve these problems accurately.

In the context of this question, a student would need to calculate the initial payment made after purchasing supplies, which would be 25% of $24,000. They would then need to determine the remaining balance after the payment and how it would affect the creation of a 1-year, 10% note. Understanding interest calculations and the amortization of loans would also be necessary for answering parts relating to the $300,000 loan and the payment extension negotiated by Richmond.

The task includes a mix of transactions such as paying part of the purchase price, taking out a loan, performing services, and handling tax withholdings. Each transaction would be recorded differently in the company's financial statements, demonstrating the diverse nature of business activities.