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Accounting 23rd Edition Carl S. Warren - Solutions
=+b. Journalize the entry to record the accrual of payroll taxes.
=+a. Calculate the employer’s payroll taxes, using the following rates: state unemployment, 4.2%; federal unemployment, 0.8%.
=+EX 11-10 Summary payroll data objs. 2, 3✔a. (3) Total earnings, $400,000 According to a summary of the payroll of Scofield Industries Co., $600,000 was subject to the 6.0% social security tax and $740,000 was subject to the 1.5% Medicare tax. Also,$20,000 was subject to state and federal
=+d. From the data given in this exercise and your answer to (a), would you conclude that this payroll was paid sometime during the first few weeks of the calendar year? Explain.
=+c. Journalize the entry to record the payment of the payroll.
=+b. Journalize the entry to record the payroll accrual.
=+a. Calculate the amounts omitted in lines (1), (3), (8), and (12).
=+10. Net amount paid 252,200 Accounts debited:11. Factory Wages 210,000 12. Sales Salaries ?13. Office Salaries 80,000
=+7. Medical insurance 14,000 8. Union dues ?9. Total deductions 147,800
=+EX 11-9 Calculate payroll obj. 2✔ Administrator net pay, $1,423.57 516 Chapter 11 Current Liabilities and Payroll In the following summary of data for a payroll period, some amounts have been intentionally omitted:Earnings:1. At regular rate ?2. At overtime rate $ 60,000 3. Total earnings
=+Determine the gross pay and the net pay for each of the three employees for the current pay period.
=+For the current pay period, the computer programmer worked 50 hours and the administrator worked 46 hours. The federal income tax withheld for all three employees, who are single, can be determined from the wage bracket withholding table in Exhibit 3 in the chapter. Assume further that the
=+EX 11-8 Calculate payroll obj. 2✔b. Net pay,$2,061.00 Reaves Professional Services has three employees—a consultant, a computer programmer, and an administrator. The following payroll information is available for each employee:Consultant Computer Programmer Administrator Regular earnings
=+b. Determine the net pay for the week.
=+a. Determine the gross pay for the week.
=+EX 11-7 Current portion of long-term debt obj. 1 An employee earns $40 per hour and 1.75 times that rate for all hours in excess of 40 hours per week. Assume that the employee worked 60 hours during the week, and that the gross pay prior to the current week totaled $58,000. Assume further that
=+c. If P.F. Chang’s did not issue additional notes payable during 2007, what would be the total notes payable on December 31, 2007?
=+b. How much did the total current liabilities change between 2005 and 2006 as a result of the current portion of long-term debt?
=+Notes payable $19,210,000 $10,470,000 Less current portion (5,487,000) (5,110,000) ___________ ___________ Long-term debt $13,723,000 $ 5,360,000 ___________ ___________ ___________ ___________a. How much of the notes payable was disclosed as a current liability on the December 31, 2006, balance
=+EX 11-6 Fixed asset purchases with note obj. 1 P.F. Chang’s China Bistro, Inc., the operator of P.F. Chang restaurants, reported the following information about its long-term debt in the notes to a recent financial statement:Long-term debt is comprised of the following:December 31, 2006 2005
=+the first installment on December 31, and (c) the payment of the second installment the following June 30.
=+EX 11-5 Entries for discounted note payable obj. 1 Chapter 11 Current Liabilities and Payroll 515 On June 30, Rioux Management Company purchased land for $400,000 and a building for $600,000, paying $500,000 cash and issuing a 6% note for the balance, secured by a mortgage on the property. The
=+EX 11-4 Entries for notes payable obj. 1 A business issued a 60-day note for $45,000 to a creditor on account. The note was discounted at 6%. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity.
=+EX 11-3 Evaluate alternative notes obj. 1 A business issued a 30-day, 4% note for $60,000 to a creditor on account. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including interest.
=+c. Which alternative is more favorable to the borrower? Explain.
=+b. Determine the proceeds received by the borrower in each situation.
=+EX 11-2 Entries for discounting notes payable obj. 1 A borrower has two alternatives for a loan: (1) issue a $240,000, 60-day, 8% note or(2) issue a $240,000, 60-day note that the creditor discounts at 8%.a. Calculate the amount of the interest expense for each option.
=+2. the receipt of the payment of the note at maturity.
=+2. the payment of the note at maturity.b. Journalize Thomson Home Furnishings Co.’s entries to record:1. the receipt of the note.
=+Prepare the Current Liabilities section of the balance sheet for I-Generation Co. on March 31, 2011.EX 11-1 Current liabilities obj. 1✔ Total current liabilities, $790,000 U-Build It Warehouse issues a 45-day note for $800,000 to Thomson Home Furnishings Co. for merchandise inventory. Thomson
=+PE 11-7B Estimated warranty liability obj. 5 EE 11-7 p. 505 Exercises I-Generation Co. sold 14,000 annual subscriptions of Climber’s World for $60 during December 2010. These new subscribers will receive monthly issues, beginning in January 2011. In addition, the business had taxable income of
=+(b) the July 16 cash payment.
=+PE 11-7A Estimated warranty liability obj. 5 EE 11-7 p. 505 Robin Industries sold $350,000 of consumer electronics during May under a nine-month warranty. The cost to repair defects under the warranty is estimated at 3% of the sales price. On July 16, a customer was given $140 cash under terms of
=+(b) the August 4 warranty work.
=+4, a customer required a $140 part replacement, plus $80 of labor under the warranty.Provide the journal entry for (a) the estimated warranty expense on April 30 and
=+PE 11-6B Vacation pay and pension benefits obj. 4 EE 11-6 p. 503 514 Chapter 11 Current Liabilities and Payroll Akine Co. sold $600,000 of equipment during April under a one-year warranty. The cost to repair defects under the warranty is estimated at 6% of the sales price. On August
=+PE 11-6A Vacation pay and pension benefits obj. 4 EE 11-6 p. 503 Hobson Equipment Company provides its employees vacation benefits and a defined benefit pension plan. Employees earned vacation pay of $20,000 for the period. The pension formula calculated a pension cost of $140,000. Only $106,000
=+PE 11-5B Journalize payroll tax obj. 3 EE 11-5 p. 496 Blount Company provides its employees with vacation benefits and a defined contribution pension plan. Employees earned vacation pay of $30,000 for the period. The pension plan requires a contribution to the plan administrator equal to 10% of
=+PE 11-5A Journalize payroll tax obj. 3 EE 11-5 p. 496 The payroll register of Salem Communications Co. indicates $29,580 of social security withheld and $7,650 of Medicare tax withheld on total salaries of $510,000 for the period.Assume earnings subject to state and federal unemployment
=+PE 11-4B Journalize period payroll obj. 3 EE 11-4 p. 495 The payroll register of Woodard Construction Co. indicates $2,552 of social security withheld and $660 of Medicare tax withheld on total salaries of $44,000 for the period.Assume earnings subject to state and federal unemployment
=+Provide the journal entry for the period’s payroll.
=+PE 11-3B Employee net pay obj. 2 EE 11-3 p. 492 The payroll register of Woodard Construction Co. indicates $2,552 of social security withheld and $660 of Medicare tax withheld on total salaries of $44,000 for the period.Federal withholding for the period totaled $8,712.
=+PE 11-3A Employee net pay obj. 2 EE 11-3 p. 492 Chapter 11 Current Liabilities and Payroll 513 Robert Clowney’s weekly gross earnings for the week ending September 5 were $800, and his federal income tax withholding was $102.95. Prior to this week, Clowney had earned $24,000 for the year.
=+PE 11-2B Federal income tax withholding obj. 2 EE 11-2 p. 491 Todd Hackworth’s weekly gross earnings for the week ending December 18 were $2,000, and his federal income tax withholding was $396.19. Prior to this week, Hackworth had earned $98,500 for the year. Assuming the social security rate
=+b. Determine the proceeds of the note, assuming the note is discounted at 10%.Todd Hackworth’s weekly gross earnings for the present week were $2,000. Hackworth has two exemptions. Using the wage bracket withholding table in Exhibit 3 with a $67 standard withholding allowance for each
=+PE 11-1A Proceeds from notes payable obj. 1 EE 11-1 p. 488 On February 1, Electronic Warehouse Co. issued a 45-day note with a face amount of$80,000 to Yamura Products Co. for cash.a. Determine the proceeds of the note, assuming the note carries an interest rate of 10%.
=+b. Determine the proceeds of the note, assuming the note is discounted at 6%.Practice Exercises
=+a. Determine the proceeds of the note, assuming the note carries an interest rate of 6%.
=+On September 1, Klondike Co. issued a 60-day note with a face amount of $100,000 to Arctic Apparel Co. for merchandise inventory.
=+How would you answer this question?
=+Several years ago, Company B instituted legal action against Company A. Under a memorandum of settlement and agreement, Company A agreed to pay Company B a total of$17,500 in three installments—$5,000 on March 1, $7,500 on July 1, and the remaining$5,000 on December 31. Company A paid the
=+14. The “Questions and Answers Technical Hotline” in the Journal of Accountancy included the following question:
=+13. General Motors Corporation reported $10.1 billion of product warranties in the Current Liabilities section of a recent balance sheet. How would costs of repairing a defective product be recorded?
=+12. When should the liability associated with a product warranty be recorded? Discuss.
=+11. Identify several factors that influence the future pension obligation of an employer under a defined benefit pension plan.
=+10. To match revenues and expenses properly, should the expense for employee vacation pay be recorded in the period during which the vacation privilege is earned or during the period in which the vacation is taken? Discuss.
=+9. Explain how a payroll system that is properly designed and operated tends to ensure that (a) wages paid are based on hours actually worked and (b) payroll checks are not issued to fictitious employees.
=+8. In a payroll system, what types of input data are referred to as (a) constants and(b) variables?
=+7. What are the principal reasons for using a special payroll checking account?
=+5. State unemployment compensation tax
=+4. Federal unemployment compensation tax
=+6. For each of the following payroll-related taxes, indicate whether they generally apply to (a) employees only, (b) employers only, or (c) both employees and employers:1. Federal income tax 2. Medicare tax 3. Social security tax
=+5. Taylor Company, with 20 employees, is expanding operations. It is trying to decide whether to hire one full-time employee for $25,000 or two part-time employees for a total of $25,000. Would any of the employer’s payroll taxes discussed in this chapter have a bearing on this decision?
=+4. Why are deductions from employees’ earnings classified as liabilities for the employer?
=+(c) social security tax, (d) federal unemployment compensation tax.
=+3. For each of the following payroll-related taxes, indicate whether there is a ceiling on the annual earnings subject to the tax: (a) federal income tax, (b) Medicare tax,
=+b. Give the title of the accounts credited by amounts withheld.
=+a. List the federal taxes withheld from most employee paychecks.
=+2. Employees are subject to taxes withheld from their paychecks.
=+1. Does a discounted note payable provide credit without interest? Discuss.
=+5. Within limitations on the maximum earnings subject to the tax, employers do not incur an expense for which of the following payroll taxes?A. Social security tax B. Federal unemployment compensation tax C. State unemployment compensation tax D. Employees’ federal income tax
=+Hours worked during current week 45 Year’s cumulative earnings prior to current week $99,400 Federal income tax withheld $450 Based on these data,the amount of the employee’s net pay for the current week is:A. $1,307.50. C. $1,450.00.B. $1,405.00. D. $1,385.50.
=+4. An employee’s rate of pay is $40 per hour, with time and a half for all hours worked in excess of 40 during a week. The social security rate is 6.0%on the first $100,000 of annual earnings, and the Medicare rate is 1.5% on all earnings. The following additional data are available:
=+3. Which of the following taxes are employers usually not required to withhold from employees?A. Federal income tax B. Federal unemployment compensation tax C. Medicare tax D. State and local income tax
=+2. A business issued a $5,000, 60-day note to a supplier, which discounted the note at 12%. The proceeds are:A. $4,400. C. $5,000.B. $4,900. D. $5,100.
=+1. A business issued a $5,000, 60-day, 12% note to the bank. The amount due at maturity is:A. $4,900. C. $5,100.B. $5,000. D. $5,600.
=+31. Journalized an entry to record the estimated accrued product warranty liability, $37,240.Instructions Journalize the preceding transactions.
=+31. Journalized an entry to record the employees’ accrued vacation pay, $36,100.
=+31. Issued a check for $9,500 to the pension fund trustee to fully fund the pension cost for December.
=+30. Issued a check in payment of liabilities for employees’ federal income tax of$17,600, social security tax of $10,100, and Medicare tax of $3,300.
=+27. Journalized the entry to record payroll taxes for social security and Medicare from the biweekly payroll.
=+Oct. 30. Paid Harold Co. the amount due on the note of August 1.Dec. 27. Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:Salary distribution:Sales $63,400 Officers 36,600 Office 10,000 $110,000 _______ Deductions:Social security tax $ 5,050 Medicare
=+Selected transactions of Taylor Company, completed during the fiscal year ended December 31, are as follows:Mar. 1. Purchased merchandise on account from Kelvin Co., $20,000.Apr. 10. Issued a 60-day, 12% note for $20,000 to Kelvin Co. on account.June 9. Paid Kelvin Co. the amount owed on the note
=+Differences between the accounting methods applied to accounts and financial reports and those used in determining taxable income yielded the following amounts for the first four years of a corporation’s operations: First Second Third Fourth Year Year Year Year Income before income taxes
=+Differences between the accounting methods applied to accounts and financial reports and those used in determining taxable income yielded the following amounts for the first four years of a corporation’s operations: First Second Third Fourth Year Year Year Year Income before income taxes
=+4. Prepare a report form of balance sheet, assuming that the current portion of the note payable is $25,000.5. Journalize the adjusting entries.6. Journalize the closing entries.
=+2. Prepare a multiple-step income statement.3. Prepare a statement of owner’s equity.
=+The data needed for year-end adjustments on December 31 are as follows:Merchandise inventory on December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $211,000 Insurance expired during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 Supplies on
=+Accounts Receivable 42,500 Cost of Merchandise Sold 557,000 Merchandise Inventory 218,000 Sales Salaries Expense 101,400 Prepaid Insurance 8,000 Advertising Expense 45,000 Store Supplies 4,200 Depreciation Expense—Office Supplies 2,100 Store Equipment —Store Equipment 282,000 Delivery Expense
=+PR C-2 End-of-period spreadsheet (work sheet), financial statements, and adjusting and closing entries for perpetual inventory system✔ 1. Net income:$38,450 Cash $ 18,000 Sales Discounts $ 7,100
=+PR C-1 End-of-period spreadsheet (work sheet), financial statements, and adjusting and closing entries for perpetual inventory system✔ 2. Net income:$38,800 The accounts and their balances in the ledger of Quality Sports Co. on December 31, 2010, are as follows:
=+3. Prepare a statement of owner’s equity.4. Prepare a report form of balance sheet, assuming that the current portion of the note payable is $36,000.5. Journalize the adjusting entries.6. Journalize the closing entries.
=+The data needed for year-end adjustments on December 31 are as follows:Physical merchandise inventory on December 31 . . . . . . . . . . . . . . . . . . . . . . $162,500 Insurance expired during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,600 Supplies on hand on
=+The accounts and their balances in the ledger of Rack Saver Co. on December 31, 2010, are as follows:Cash $ 12,000 Sales $800,000 Accounts Receivable 72,500 Sales Returns and Allowances 11,900 Merchandise Inventory 170,000 Sales Discounts 7,100 Prepaid Insurance 9,700 Cost of Merchandise Sold
=+EX B-3 Entries posted to the wages expense account Portions of the salaries expense account of a business are shown below.Account Salaries Expense Account No. 53 Post.Balance Date Item Ref. Dr. Cr. Dr. Cr.2009 Dec. 27 (1) 29 17,500 910,000 31 (2) 30 7,000 917,000 31 (3) 31 917,000 — —2010
=+b. Journalize the complete entry from which each numbered posting was made.Account Wages Expense Account No. 53 Post.Balance Date Item Ref. Dr. Cr. Dr. Cr.2009 Dec. 26 (1) 49 27,000 1,400,000 31 (2) 50 16,200 1,416,200 31 (3) 51 1,416,200 — —2010 Jan. 1 (4) 52 16,200 16,200 2 (5) 53 27,000
=+a. Indicate the nature of the entry (payment, adjusting, closing, reversing) from which each numbered posting was made.
=+EX B-2 Adjusting and reversing entries Appendix B Reversing Entries B-4 Portions of the wages expense account of a business are shown below.
=+2. Accrued fees earned but not recorded at June 30, $36,100.
=+1. Wages are uniformly $25,900 for a five-day workweek, ending on Friday. The last payday of the year was Friday, June 27.
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