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: 6% 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: 5% 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.;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;12/1;Borrowed $20,000 from the First City Bank by signing a 3-;month, 15% note payable. Interest and principal are due at maturity.;12/10;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 2% of the units will require;repair, with warranty costs averaging $27 per unit (parts only).;12/22;Purchased $16,000 of merchandise on account from Oregon;Company, terms 2/10, n/30.;12/26;Borrowed $5,000 from First City Bank, signed a 15% note;payable due in 60 days. (Assume 360 days for daily interest calculation);12/31;Repaired six XY-80s during the month at a total cost of;$162.;12/31;Accrued 3 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;8/2;Borrowed $75,000 from the Bank of;Kingsville by signing a 120-day, 12% note.;8/20;Issued a $40,000 note to Harris;Motors for the purchase of a $40,000 de?livery truck. The note is due in 180;days and carries a 12% interest rate.;9/10;Purchased inventory from Pans;Enterprises in the amount of $15,000. Issued a 30-day, 12% note in settlement;of the balance owed.;9/11;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 car?ries a 14% interest rate.;10/10;The note to Pans Enterprises was;paid in full.;10/11: The note to Datatex Equipment was paid;in full.;11/30: 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#45581 | Written in 18-Jul-2015Price : $27