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#79201 | Written in 18-Jul-2015Price : $22