Details of this Paper

Three questions_ Current liabilities: entries and disclosure

Description

solution


Question

Question;Week Four Exercise;Assignment;Liability;1. Payroll;accounting. Assume that the following tax rates and payroll information pertain;to *;? Social Security;taxes: 4% on the first $55,000 earned per employee;? Medicare taxes;1.5% on the first $130,000 earned per employee;? Federal income;taxes withheld from wages: $7,500;? State income taxes;4% of gross earnings;? Insurance;withholdings: 1% of gross earnings;? State unemployment;taxes: 5.4% on the first $7,000 earned per employee;? Federal;unemployment taxes: 0.8% on the first $7,000 earned per employee;The company incurred;a salary expense of $50,000 during February. All employees had earned less than;$5,000 by month-end and no wages have been paid during the month.;a. Prepare the;necessary entry to record Brookhaven?s February payroll. The entry will include;deductions for the following;? Social Security;taxes;? Medicare taxes;? Federal income;taxes withheld;? State income taxes;? Insurance;withholdings;b. Prepare the journal;entry to record Brookhaven?s payroll tax expense. The entry will include the;following;? Matching Social;Security taxes;? Matching Medicare;taxes;? State unemployment;taxes;? Federal;unemployment taxes;2. Current liabilities: entries and disclosure. A;review of selected financial activities of Visconti?s during 20XX disclosed the;following;1-Dec: Borrowed;$10,000 from the First City Bank by signing a 3-month, 15% note payable.;Interest and;principal are due at maturity.;10-Dec: Established a;warranty liability for the XY-80, a new product. Sales are expected to;total 1,000 units;during the month. Past experience with;similar products indicates;that 3% of the units;will require repair, with warranty costs averaging $27 per unit (parts only).;22-Dec: Purchased;$16,000 of merchandise on account from Oregon Company, terms 2/10, n/30.;26-Dec: Borrowed;$5,000 from First City Bank, signed a 15% note payable due in 60 days. (Assume;360 day year for interest);31-Dec: Repaired six;XY-80s during the month at a total cost of $162;31-Dec: Accrued three;days of salaries at a total cost of $1,400.;Instructions;a. Prepare journal;entries to record the transactions.;b. Prepare adjusting;entries on December 31 to record accrued interest for each of the notes;payable.;3. Notes payable. Red;Bank Enterprises was involved in the following transactions during the fiscal;year ending October 31;2-Aug: Borrowed;$55,000 from the Bank ofKingsville by signing a 90-day;12% note.;20-Aug: Issued a;$50,000 note toHarris;Motorsfor the purchase of a $50,000 delivery truck. The note is due in 180 days;and carries a 12% interest rate.;10-Sep: Purchased;merchandise fromPans;Enterprisesin the amount of $15,000. Issued;a 30-day, 12% note in;settlement of the balance owed.;11-Sep: Issued a;$60,000 note to Datatex Equipment in settlement of an overdue account;payable of the same;amount. The note is due in 30 days and;carries a 14% interest rate.;10-Oct: The note toPans Enterpriseswas paid in full.;11-Oct: The note to;Datatex Equipment was paid in full.;30-Oct: Paid note to;Bank ofKingsville.;Instructions;a. Prepare journal;entries to record the transactions.;b. Prepare adjusting;entries on December 31 to record accrued interest. (Daily interest is;calculated utilizing the 360 day method).;c. Prepare the;Current Liability section of Red Bank?s balance sheet as of December 31. Assume;that the Accounts Payable account totals $203,600 on this date.

 

Paper#37336 | Written in 18-Jul-2015

Price : $41
SiteLock