Question;Week Four Exercise;Assignment;Liability;1. Payroll accounting. Assume that;the following tax rates and payroll information pertain to Brookhaven;Publishing;?;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 of Kingsville by signing a 90-day, 12% note.;20-Aug: Issued a $50,000 note to;Harris Motors for the purchase of a $50,000 delivery truck. The note is due;in 180 days and carries a 12% interest r ate.;10-Sep: Purchased merchandise from;Pans Enterprises in 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 to Pans;Enterprises was paid in full.;11-Oct: The note to Datatex;Equipment was paid in full.;30-Oct: Paid note to Bank of;Kingsville.;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#37449 | Written in 18-Jul-2015Price : $29