Part A: Candlelight Corporation, whose fiscal year ended June 30, 2014, completed the following transactions involving notes payable:
May 21 Obtained a 60-day extension on an $36,000 trade account payable owed to a supplier by signing a 60-day $36,000 note. Interest is in addition to the face value, at the rate of 14 percent.
June 30 Made the end-of-year adjusting entry to accrue interest expense. (Round to the nearest cent.)
July 20 Paid off the note plus interest due the supplier. (Round to the nearest cent.)

1. Prepare journal entries for the notes payable transactions.
2. When notes payable appears on the balance sheet, what other current liability would you look for to be associated with the notes? What would it mean if this other current liability did not appear?

Part B: The payroll register for Candlelight Corporation contained the following totals at the end of July: wages, $278,250; federal income taxes withheld, $71,163; state income taxes withheld, $11,727; Social Security tax withheld, $17,253; Medicare tax withheld, $4,035; medical insurance deductions, $9,600; and wages subject to unemployment taxes, $171,720.

Prepare journal entries to record the
(1) Monthly payroll
(2) Employer payroll expenses, assuming Social Security and Medicare taxes equal to the amount for employees, a federal unemployment insurance tax of 0.8 percent, a state unemployment tax of 5.4 percent, and medical insurance premiums for which the employer pays 80 percent of the cost.

  • CreatedMarch 26, 2014
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