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ACC 205 Week 4 Exercise Assignment




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#81932 | Written in 18-Jul-2015

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