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Accounting 23rd Edition Carl S. Warren - Solutions

=+b. Vacation pay, $11,500.Problems Series B
=+a. Salaries accrued: operations salaries, $3,420; officers salaries, $2,240; office salaries,$540. The payroll taxes are immaterial and are not accrued.
=+2. Journalize the following adjusting entries on December 31:
=+30. Issued Check No. 356 for $17,065 to Johnson Bank in payment of employees’ state income tax due on December 31.Chapter 11 Current Liabilities and Payroll 523 Dec. 31. Paid $34,000 to the employee pension plan. The annual pension cost is$40,000. (Record both the payment and unfunded pension
=+30. Issued Check No. 354 to Johnson Bank for $2,800 to purchase U.S. savings bonds for employees.
=+28. Journalized the entry to record payroll taxes on employees’ earnings of December 28: social security tax, $3,348; Medicare tax, $930; state unemployment tax, $150; federal unemployment tax, $50.
=+28. Issued Check No. 352 in payment of the net amount of the biweekly payroll.
=+Medicare tax 930 Federal income tax withheld 11,036 State income tax withheld 2,790 Savings bond deductions 1,400 19,504 _______ _______ Net amount $42,496 _______ _______
=+28. Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:Salary distribution:Operations $34,200 Officers 22,400 Office 5,400 $62,000 _______ Deductions:Social security tax $ 3,348
=+18. Issued Check No. 340 to Tidy Insurance Company for $22,000, in payment of the semiannual premium on the group medical insurance policy.
=+17. Issued Check No. 335 to Johnson Bank for $20,287, in payment of $7,100 of social security tax, $1,902 of Medicare tax, and $11,285 of employees’ federal income tax due.
=+14. Journalized the entry to record payroll taxes on employees’ earnings of December 14: social security tax, $3,550; Medicare tax, $951; state unemployment tax, $300; federal unemployment tax, $100.
=+14. Issued Check No. 331 in payment of the net amount of the biweekly payroll.
=+14. Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:Salary distribution:Operations $34,800 Officers 22,900 Office 5,700 $63,400 _______ Deductions:Social security tax $ 3,550 Medicare tax 951 Federal income tax withheld 11,285 State income tax
=+3. Issued Check No. 322 to Johnson Bank for $20,877, in payment of $7,234 of social security tax, $1,904 of Medicare tax, and $11,739 of employees’ federal income tax due.
=+Dec. 2. Issued Check No. 321 for $2,800 to Johnson Bank to purchase U.S. savings bonds for employees.
=+217 Federal Unemployment Tax Payable 400 The following transactions relating to payroll, payroll deductions, and payroll taxes occurred during December:
=+216 State Unemployment Tax Payable 1,200 719 Payroll Tax Expense 109,318
=+214 Employees Federal Income Tax Payable 11,739 711 Officers Salaries Expense 504,000 215 Employees State Income Tax Payable 11,422 712 Office Salaries Expense 126,000
=+212 Social Security Tax Payable $ 7,234 219 Medical Insurance Payable 22,000 213 Medicare Tax Payable 1,904 611 Operations Salaries Expense 766,000
=+PR 11-6A Payroll accounts and year-end entries objs. 2, 3, 4 522 Chapter 11 Current Liabilities and Payroll 211 Salaries Payable — 218 Bond Deductions Payable $ 2,800
=+PR 11-5A Payroll register objs. 2, 3✔ 1. Total net amount payable,$9,260.56 The following accounts, with the balances indicated, appear in the ledger of Wadsley Gifts Co. on December 1 of the current year:
=+2. Journalize the entry to record the payroll sales for the week.
=+/2 times the regular rate for all hours in excess of 40 hours per week. The social security tax rate is 6.0% on the first $100,000 of each employee’s annual earnings, and Medicare tax is 1.5% of each employee’s annual earnings. The next payroll check to be used is No. 345.Instructions 1.
=+Employees Olson and Odom are office staff, and all of the other employees are sales personnel. All sales personnel are paid 11
=+The following data for Enrichment Industries, Inc. relate to the payroll for the week ended December 10, 2010:Accumulated Hours Hourly Weekly Federal U.S. Savings Earnings, Employee Worked Rate Salary Income Tax Bonds Dec. 3 Beilein 32 $16.00 $102.40 10 $ 24,576 Calhoun 50 32.00 369.60 10 84,480
=+PR 11-4A Payroll register objs. 2, 3✔ 3. Dr. Payroll Tax Expense, $773.71
=+4. Journalize the entry to record a check issued on September 15 to Fourth National Bank in payment of employees’ income taxes, $1,944.78, social security taxes,$1,084.32, and Medicare taxes, $343.10.
=+3. Journalize the entry to record the employer’s payroll taxes for the week. Assume the following tax rates: state unemployment, 3.2%; federal unemployment, 0.8%. Of the earnings, $1, 500 is subject to unemployment taxes.
=+2. Journalize the entry to record the issuance of the checks to employees.
=+1. Journalize the entry to record the payroll for the week.
=+If the working papers correlating with this textbook are not used, omit Problem 11-4A.The payroll register for Namesake Co. for the week ended September 12, 2010, is presented in the working papers.Instructions
=+(b) Medicare; (c) state unemployment compensation at 4.8% on the first $8,000 of each employee’s earnings; (d) federal unemployment compensation at 0.8% on the first $8,000 of each employee’s earnings; (e) total.
=+2. Calculate the following employer payroll taxes for the year: (a) social security;
=+PR 11-3A Wage and tax statement data on employer FICA tax objs. 2, 3✔ 2. (e) $28,503 Chapter 11 Current Liabilities and Payroll 521 Instructions 1. Calculate the amounts to be reported on each employee’s Wage and Tax Statement(Form W-2) for 2009, arranging the data in the following form:Gross
=+Monthly Date First Monthly Income Tax Employee Employed Salary Withheld Brooks Jan. 2 $ 3,400 $ 502 Croom June 16 5,600 1,052 Fulmer Apr. 1 2,500 310 Johnson Oct. 1 2,500 310 Nutt Jan. 2 10,000 2,253 Richt Jan. 16 3,600 552 Spurrier Mar. 1 8,600 1,861
=+None of the employees resigned or were discharged during the year, and there were no changes in salary rates. The social security tax was withheld at the rate of 6.0%on the first $100,000 of salary and Medicare tax at the rate of 1.5% on salary. Data on dates of employment, salary rates, and
=+the middle of the month receives half the monthly salary for that month. All required payroll tax reports were filed, and the correct amount of payroll taxes was remitted by the company for the calendar year. Early in 2010, before the Wage and Tax Statements(Form W-2) could be prepared for
=+PR 11-2A Entries for payroll and payroll taxes objs. 2, 3✔ 1. (b) Dr. Payroll Tax Expense,$36,026 Gridiron Concepts Co. began business on January 2, 2009. Salaries were paid to employees on the last day of each month, and social security tax, Medicare tax, and federal income tax were withheld
=+b. January 5, to record the employer’s payroll taxes on the payroll to be paid on January 5.
=+2. Assuming that the payroll for the last week of the year is to be paid on January 5 of the following fiscal year, journalize the following entries:a. December 30, to record the payroll.
=+a. December 30, to record the payroll.b. December 30, to record the employer’s payroll taxes on the payroll to be paid on December 31. Of the total payroll for the last week of the year, $25,000 is subject to unemployment compensation taxes.
=+1. Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the following entries:
=+$143,640 ________ Tax rates assumed:Social security, 6% on first $100,000 of employee annual earnings Medicare, 1.5%State unemployment (employer only), 4.2%Federal unemployment (employer only), 0.8%Instructions
=+Salaries: Deductions:Sales salaries $244,000 Income tax withheld $ 88,704 Warehouse salaries 135,000 Social security tax withheld 27,216 Office salaries 125,000 Medicare tax withheld 7,560 ________$504,000 U.S. savings bonds 11,088 ________ ________ Group insurance 9,072 ________ ________
=+2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year: (a) product warranty cost, $16,400; (b) interest on the nine remaining notes owed to Mountain Equipment Co.The following information about the payroll for the week ended December 30 was
=+PR 11-1A Liability transactions objs. 1, 5 520 Chapter 11 Current Liabilities and Payroll Instructions 1. Journalize the transactions.
=+31. Paid the amount due Mountain Equipment Co. on the first note in the series issued on December 1.
=+5. Settled a product liability lawsuit with a customer for $76,000, payable in January. Emerald Bay accrued the loss in a litigation claims payable account.
=+Dec. 1. Purchased office equipment from Mountain Equipment Co. for $120,000, paying $20,000 and issuing a series of ten 6% notes for $10,000 each, coming due at 30-day intervals.
=+Oct. 8. Paid Columbia Supply Co. the amount due on the note of July 10.
=+Sept.30. Paid Acme Bank the amount due on the note of August 1.
=+debit and credit to the notes payable account.)
=+Co., which discounted the note at the rate of 6%.Aug. 1. Paid Acme Bank the interest due on the note of June 2 and renewed the loan by issuing a new 60-day, 10% note for $187,500. (Journalize both the
=+July 10. Purchased tools by issuing a $190,000, 90-day note to Columbia Supply
=+Feb. 14. Issued a 60-day, 6% note for $220,000 to Hood Co., on account.Apr. 15. Paid Hood Co. the amount owed on the note of February 14.June 2. Borrowed $187,500 from Acme Bank, issuing a 60-day, 8% note.
=+EX 11-24 Quick ratio Problems Series A The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year:Jan. 15. Purchased merchandise on account from Hood Co., $220,000, terms n/30.
=+b. Interpret the quick ratio difference between the two companies.
=+a. Determine the quick ratio for both companies.
=+Accounts payable $ 4,970 $10,430 Accrued and other current liabilities 4,329 7,361 _______ _______ Total current liabilities $ 9,299 $17,791 _______ _______ _______ _______*These represent prepaid expense and other nonquick current assets.
=+The current assets and current liabilities for Apple Computer, Inc., and Dell Inc. are shown as follows at the end of a recent fiscal period:Apple Computer, Inc. Dell Inc.(In millions) (In millions)Sept. 29, 2007 Feb. 2, 2007 Current assets:Cash and cash equivalents $ 9,352 $ 9,546 Short-term
=+b. Interpret the change in the quick ratio between the two balance sheet dates.
=+a. Determine the quick ratio for December 31, 2010 and 2009.
=+EX 11-23 Quick ratio✔a. 2010: 1.10 Chapter 11 Current Liabilities and Payroll 519 Dec. 31, 2010 Dec. 31, 2009 Current liabilities:Current portion of long-term debt $110,000 $ 100,000 Accounts payable 220,000 200,000 Accrued and other current liabilities 370,000 360,000 _________ __________
=+EX 11-22 Contingent liabilities obj. 5 Austin Technology Co. had the following current assets and liabilities for two comparative years:Dec. 31, 2010 Dec. 31, 2009 Current assets:Cash $370,000 $ 448,000 Accounts receivable 400,000 410,000 Inventory 220,000 180,000 _________ __________ Total
=+b. Prepare a note disclosure relating to this incident.
=+a. Journalize the contingent liabilities associated with the hazardous materials spill. Use the account “Damage Awards and Fines” to recognize the expense for the period.
=+Welker’s legal counsel believes that it is probable that the EPA fine will stand. In addition, counsel indicates that an out-of-court settlement of $170,000 has recently been reached with the employee. The final papers will be signed next week. Counsel believes that the homeowner’s case is
=+EX 11-21 Accrued product warranty obj. 5 Several months ago, Welker Chemical Company experienced a hazardous materials spill at one of its plants. As a result, the Environmental Protection Agency (EPA) fined the company $410,000. The company is contesting the fine. In addition, an employee is
=+b. Provide the journal entry for the 2006 product warranty expense.
=+a. Why are short- and long-term estimated warranty liabilities separately disclosed?
=+Total $21,933 $20,433 _______ _______ _______ _______ Ford’s sales were $160,123 million in 2005 and increased to $176,896 million in 2006.Assume that the total paid on warranty claims during 2006 was $14,000 million.
=+EX 11-20 Accrued product warranty obj. 5 Ford Motor Company disclosed estimated product warranty payable for comparative years as follows:(in millions)12/31/06 12/31/05 Current estimated product warranty payable $13,644 $13,074 Noncurrent estimated product warranty payable 8,289 7,359 _______
=+b. Journalize the entry to record the warranty work provided in July.
=+a. Journalize the adjusting entry required at June 30, the end of the first month of the current fiscal year, to record the accrued product warranty.
=+EX 11-19 Defined benefit pension plan terms obj. 4 Lachgar Industries warrants its products for one year. The estimated product warranty is 4% of sales. Assume that sales were $210,000 for June. In July, a customer received warranty repairs requiring $140 of parts and $95 of labor.
=+EX 11-18 Pension plan entries obj. 4 518 Chapter 11 Current Liabilities and Payroll In a recent year’s financial statements, Procter & Gamble showed an unfunded pension liability of $2,637 million and a periodic pension cost of $183 million.Explain the meaning of the $2,637 million unfunded
=+EX 11-17 Accrued vacation pay obj. 4 Washington Co. operates a chain of bookstores. The company maintains a defined contribution pension plan for its employees. The plan requires quarterly installments to be paid to the funding agent, Hamilton Funds, by the fifteenth of the month following the
=+EX 11-16 Payroll procedures obj. 3 A business provides its employees with varying amounts of vacation per year, depending on the length of employment. The estimated amount of the current year’s vacation pay is $80,400. Journalize the adjusting entry required on January 31, the end of the first
=+What is wrong with these procedures for accounting for payroll taxes?
=+EX 11-15 Internal control procedures obj. 3 The fiscal year for Grain-Crop Stores Inc. ends on June 30. In addition, the company computes and reports payroll taxes on a fiscal-year basis. Thus, it applies social security and FUTA maximum earnings limitations to the fiscal-year payroll.
=+e. Paychecks are signed by using a check-signing machine. This machine is located in the main office so that it can be easily accessed by anyone needing a check signed.State whether each of the procedures is appropriate or inappropriate after considering the principles of internal control. If a
=+d. Kailua Motors maintains a separate checking account for payroll checks. Each week, the total net pay for all employees is transferred from the company’s regular bank account to the payroll account.
=+c. Whenever an employee receives a pay raise, the supervisor must fill out a wage adjustment form, which is signed by the company president. This form is used to change the employee’s wage rate in the payroll system.
=+b. Whenever a salaried employee is terminated, Personnel authorizes Payroll to remove the employee from the payroll system. However, this procedure is not required when an hourly worker is terminated. Hourly employees only receive a paycheck if their time cards show hours worked. The computer
=+a. All employees are required to record their hours worked by clocking in and out on a time clock. Employees must clock out for lunch break. Due to congestion around the time clock area at lunch time, management has not objected to having one employee clock in and out for an entire department.
=+EX 11-14 Payroll internal control procedures obj. 3 Kailua Motors is a small manufacturer of specialty electric motors. The company employs 26 production workers and 7 administrative persons. The following procedures are used to process the company’s weekly payroll:
=+how will this error be detected?
=+Does Hillman Pizza have internal controls in place to catch this error? If so,
=+For the week of July 11, the accountant accidentally recorded 250 hours worked instead of 40 hours for one of the full-time employees.
=+Hillman Pizza uses a personal computer to assist in preparing paychecks. Each week, the store’s accountant collects employee time cards and enters the hours worked into the payroll program. The payroll program calculates each employee’s pay and prints a paycheck. The accountant uses a
=+EX 11-13 Payroll entries obj. 3 Chapter 11 Current Liabilities and Payroll 517 Hillman Pizza is a pizza restaurant specializing in the sale of pizza by the slice. The store employs 7 full-time and 13 part-time workers. The store’s weekly payroll averages$3,800 for all 20 workers.
=+b. Journalize the entry to record the payroll tax expense incurred for the week of December 10.
=+a. Journalize the entry to record the payroll for the week of December 10.
=+Social security 6.0%Medicare 1.5%State unemployment 5.3%Federal unemployment 0.8%The total amount withheld from employee wages for federal taxes was $40,000.
=+EX 11-12 Payroll entries obj. 3 Thorup Company had gross wages of $200,000 during the week ended December 10.The amount of wages subject to social security tax was $180,000, while the amount of wages subject to federal and state unemployment taxes was $25,000. Tax rates are as follows:
=+b. Journalize the entry to record the payroll tax expense incurred for the week of December 17.
=+a. Journalize the entry to record the payroll for the week of December 17.
=+In addition, state and federal unemployment taxes were calculated at the rate of 5.2%and 0.8%, respectively, on $10,000 of salaries.
=+EX 11-11 Payroll tax entries obj. 3 The payroll register for Gentry Company for the week ended December 17 indicated the following:Salaries $540,000 Social security tax withheld 25,380 Medicare tax withheld 8,100 Federal income tax withheld 108,000

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