1. AC 113- Unit 9 Chapter 8

2. CALCULATION OF NET PAY Blake Edwards is single. He claims one withholding allowance. During the week of July 21, he worked 46 hours. Blake is in a non-exempt position. His regular wage rate is $19 per hour. Prior to the week of July 21, Blake has earned $26,100. In addition to social security and Medicare taxes, withholdings from Blake’s check are federal income taxes, $175; state and local taxes, $48; United Way contributions, $5; and health insurance contributions, $20. Calculate Blake’s net pay.

3. CALCULATION OF NET PAY Gross pay: 40 hours  $19.00/hour=$760.00 6 hours  $28.50/hour= 171.00 $931.00 Deductions: Federal income tax$175.00 Social security tax 55.86 Medicare tax 13.97 State and local tax 48.00 United Way 5.00 Health insurance 20.00 Total deductions 317.83 Net pay $613.17

4. CHARACTERISTICS OF BONDS Issued with face values of $1,000 (or multiples of $1,000) Usually pay interest semiannually Prices quoted as a percentage of face value

5. STEPS TO ISSUE A BOND The corporation’s board of directors approves a bond issue, specifying the amount of bonds that will be issued, the maturity date, the interest rate, and any special bond characteristics (i.e., conversion features, call features, collateral attached). The company prepares a prospectus, which gives information about the company and the bond issue. This prospectus is filed with the Securities and Exchange Commission (SEC). The SEC reviews the prospectus to see that it provides investors with the information they will need to evaluate the bond issue. If the prospectus contains the appropriate information, the SEC approves the issue. (SEC approval doesn’t mean that the bond is a good investment, only that the company has disclosed adequate information for a knowledgeable investor to determine whether it is a good investment.) An underwriter is contracted. The bonds are sold. But what happens if the interest rates have changed from those specified by the board of directors?

6. STATEMENT OF STOCKHOLDERS’ EQUITY—TELDAR CORPORATION The January 1, 2006 balances of Teldar Corporation’s equity accounts are listed below: Preferred Stock$300,000 Common Stock$800,000 Paid-In Capital—Common Stock $50,000 Retained Earnings$240,000 During 2006, the following transactions affected Teldar’s equity accounts: 1,000 shares of $10 par value common stock were sold for $12 per share. 500 shares of common stock were repurchased to be held as treasury stock. The cost to repurchase these shares was $6,000. Treasury shares costing $1,500 were reissued for $2,000. 2000 net income was $170,000. Dividends totaling $30,000 were declared and paid to preferred stockholders; common dividends were $50,000.

7. Teldar Corporation Statement of Stockholders’ Equity For the Year Ended December 31, 2006 Paid-InCapital— PreferredCommonCommonTreasuryRetained Treasury Stock StockStockStockEarningsStock Balance, January 1$300,000$800,000$50,000$0$240,000 $0 Issued common stock 10,000 2,000 Purchased treasury stock (6,000) Reissued treasury stock500 1,500 Net income170,000 Preferred dividends(30,000) Common dividends(50,000) Balance, December 31$300,000$810,000$52,000$500$330,000 $4,500