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om alles: Current, Installent Notes, and contingencies Copperfield and Company You voted your first accounting, as the accounts payable and payroll ctor for Copperfield art company provider of Goliate winess to suit your recent wory la vel up to speed and complete the unfinished tasks as soon as possible Your tasks on your first day are the following 1 Review the Payroll Journal entries made by your predecessor 2 Compute the relevant amounts for the company short term not payable and termine whether your predecessos para entrare Cart Confin the journal entry for this year's payment on an installment noto 4 Manea commandation as to whother the company should Journalize any warranty oxpanse for the month You decide to get started the sooner the better Chart of Accounts CHART OF ACCOUNTS Copperfield and Company General Lodger REVENUE 410 Sales 610 Interest Revenue ASSETS 110 Cash 112 Accounts Receivable 113 Interest Receivable 114 Notes Receivable 115 Inventory 117 Supplies 118 Prepald Insurance 120 Land 123 Building 124 Accumulated Depreciation-Building 125 Office Equipment 126 Accumulated Depreciation Office Equipment LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Interest Payable 215 Notes Payable 216 Social Security Tax Payable 217 Medicare Tax Payable 218 Employees Federal Income Tax Payable 219 Employees State Income Tax Payable 220 Retirement Contributions Payable 221 Charitable Contributions Payable 222 Medical Insurance Payable 224 Federal Unemployment Tax Payable 225 State Unemployment Tax Payable 228 Product Warranty Payable EXPENSES 510 Cost of Goods Sold 520 Sales Salaries Expense 521 Factory Wages Expense 522 Officers Salaries Expense 523 Delivery Expense 524 Depreciation Expense-Building 526 Repairs Expense 529 Selling Expenses 530 Office Salaries Expense 531 Rent Expense 532 Depreciation Expense-Office Equipment 533 Insurance Expense 534 Supplies Expense 535 Payroll Tax Expense 536 Pension Expense 538 Cash Short and Over 539 Product Warranty Expense 540 Miscellaneous Expense 710 Interest Expense EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends 3:36 AM 401k plans to employees. Review the joumol entries, then answer the questions that follow. PAGE 32 ACCOUNTING EQUATION JOURNAL ASSETS LIABILITIES EQUITY POST REF CREDIT DATE DESCRIPTION Oct. 15 Sales Salaries Expense DEBIT 123,000.00 1 442,800.00 Officers Salaries Expense 82,000.00 Office Salaries Expense -- 172,200.00 49,200.00 1 12,300.00 1 147,600.00 1 7 Factory Wages Expense Social Security Tax Payable Medicare Tax Payable Employees Federal Income Tax Payable Medical Insurance Payable Retirement Contributions Payable Salaries Payable 90,200.00 1 1 123,000.00 397,700 00 10 ! 62,864.00 11 15 49,200.00 1 12 12,300.00 1 13 176.00 1 14 Payroll Tax Expense Social Security Tax Payable Medicare Payable Federal Unemployment Tax Payable State Unemployment Tax Payable Pension Expense Cash 1,188.00 1 15 1 73,800.00 16 15 73,800.00 . 17 In order to confirm the previous clerk's payroll calculations, you have been asked to supply the following amounts based on your review of the payroll entries. These amounts will be checked against the com 1. Determine the payroll amount subject to federal and state unemployment taxes in this payroll $ 2. What is the total payroll for Copperfield and Company shown in these joumal entries? S 3. What is Copperfield and Company's share of FICA taxes in this payroll? $ 4. How much has Copperfield and Company contributed to employee 401k plans in this payroll? $ Short-Term Note Payable Copperfield and Company issued a 90-day, 5.00% note for $190,000 to a creditor on account. The previous clerk entered the following Joumal entries to record the note on July 10, and the payment of the no PAGE 25 JOURNAL ACCOUNTING EQUATION DEBIT CREDIT POST REF ASSETS EQUITY LIABILITIES DESCRIPTION 190,000.00 ! 190,000.00 1 2 DATE Jul 10 Accounts Payable Notes Payable Notes Payable Accounts Payable Interest Expense 199,500.00 ! 190,000.00 1 9,500.00 5 You notice that the joumal entry for recording the note on July 10 is correct, but the entry for the payment of the noto at maturity (including interest) did not have a date and was not correct 2/4 Joumalize the payment of the note at maturity as it should have been joumalized. Don't forget to include the date. Assume a 360-day year PAGE 25 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. EQUITY DEBIT ASSETS LIABILITIES CREDIT 1 2 3 Installment Note The following journal entry was made by your predecessor to record the annual payment on a 5%, 10-year installment note. PAGE 22 JOURNAL ACCOUNTING EQUATION DATE POST REF DESCRIPTION DERIT CREDIT ASSETS LIABILITIES EQUITY Oct. 1 1 + Interest Expense 710 178,300.00 524.262.00 2 1 215 Notes Payable 3 Cash 110 702.562.00 1 Using the information provided, computo the following amounts. 1. What was the carrying amount (book value) of the installment note before the payment on October 1? $ 2. What portion of next year's payment will be interest? (Round the amount to the nearest dollar) $ Warranty Copperfield and Company has decided to provide a warranty on its products. The previous clerk left a note with the files on this new warranty on glass breakage, deciding that an entry for warranty expense "Our product is the finest in the world, and thus the contingency of a warranty replacement for breakage is remote. Under accounting standards, the proper treatment for a remote likelihood of occurrence is to journal entry should be made for warranty expense." You should review the previous clerk's notes and evaluate the decision. After refreshing your memory on the treatment of contingent liabilities, what action will you take? Make no entry, the previous clerk is correct that there is a remote chance of any breakage, Journalize an adjusting entry debiting Product Warranty Expense and crediting Product Warranty Payable. Assume that a reasonable estimate of the warranty cost can be determined by an exam Since there's no way to accurately determine the amount of breakage that might occur, no entry or disclosure is required. Make no entry, but disclose the possible warranty liability amount in the notes to the company financial statements om alles: Current, Installent Notes, and contingencies Copperfield and Company You voted your first accounting, as the accounts payable and payroll ctor for Copperfield art company provider of Goliate winess to suit your recent wory la vel up to speed and complete the unfinished tasks as soon as possible Your tasks on your first day are the following 1 Review the Payroll Journal entries made by your predecessor 2 Compute the relevant amounts for the company short term not payable and termine whether your predecessos para entrare Cart Confin the journal entry for this year's payment on an installment noto 4 Manea commandation as to whother the company should Journalize any warranty oxpanse for the month You decide to get started the sooner the better Chart of Accounts CHART OF ACCOUNTS Copperfield and Company General Lodger REVENUE 410 Sales 610 Interest Revenue ASSETS 110 Cash 112 Accounts Receivable 113 Interest Receivable 114 Notes Receivable 115 Inventory 117 Supplies 118 Prepald Insurance 120 Land 123 Building 124 Accumulated Depreciation-Building 125 Office Equipment 126 Accumulated Depreciation Office Equipment LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Interest Payable 215 Notes Payable 216 Social Security Tax Payable 217 Medicare Tax Payable 218 Employees Federal Income Tax Payable 219 Employees State Income Tax Payable 220 Retirement Contributions Payable 221 Charitable Contributions Payable 222 Medical Insurance Payable 224 Federal Unemployment Tax Payable 225 State Unemployment Tax Payable 228 Product Warranty Payable EXPENSES 510 Cost of Goods Sold 520 Sales Salaries Expense 521 Factory Wages Expense 522 Officers Salaries Expense 523 Delivery Expense 524 Depreciation Expense-Building 526 Repairs Expense 529 Selling Expenses 530 Office Salaries Expense 531 Rent Expense 532 Depreciation Expense-Office Equipment 533 Insurance Expense 534 Supplies Expense 535 Payroll Tax Expense 536 Pension Expense 538 Cash Short and Over 539 Product Warranty Expense 540 Miscellaneous Expense 710 Interest Expense EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends 3:36 AM 401k plans to employees. Review the joumol entries, then answer the questions that follow. PAGE 32 ACCOUNTING EQUATION JOURNAL ASSETS LIABILITIES EQUITY POST REF CREDIT DATE DESCRIPTION Oct. 15 Sales Salaries Expense DEBIT 123,000.00 1 442,800.00 Officers Salaries Expense 82,000.00 Office Salaries Expense -- 172,200.00 49,200.00 1 12,300.00 1 147,600.00 1 7 Factory Wages Expense Social Security Tax Payable Medicare Tax Payable Employees Federal Income Tax Payable Medical Insurance Payable Retirement Contributions Payable Salaries Payable 90,200.00 1 1 123,000.00 397,700 00 10 ! 62,864.00 11 15 49,200.00 1 12 12,300.00 1 13 176.00 1 14 Payroll Tax Expense Social Security Tax Payable Medicare Payable Federal Unemployment Tax Payable State Unemployment Tax Payable Pension Expense Cash 1,188.00 1 15 1 73,800.00 16 15 73,800.00 . 17 In order to confirm the previous clerk's payroll calculations, you have been asked to supply the following amounts based on your review of the payroll entries. These amounts will be checked against the com 1. Determine the payroll amount subject to federal and state unemployment taxes in this payroll $ 2. What is the total payroll for Copperfield and Company shown in these joumal entries? S 3. What is Copperfield and Company's share of FICA taxes in this payroll? $ 4. How much has Copperfield and Company contributed to employee 401k plans in this payroll? $ Short-Term Note Payable Copperfield and Company issued a 90-day, 5.00% note for $190,000 to a creditor on account. The previous clerk entered the following Joumal entries to record the note on July 10, and the payment of the no PAGE 25 JOURNAL ACCOUNTING EQUATION DEBIT CREDIT POST REF ASSETS EQUITY LIABILITIES DESCRIPTION 190,000.00 ! 190,000.00 1 2 DATE Jul 10 Accounts Payable Notes Payable Notes Payable Accounts Payable Interest Expense 199,500.00 ! 190,000.00 1 9,500.00 5 You notice that the joumal entry for recording the note on July 10 is correct, but the entry for the payment of the noto at maturity (including interest) did not have a date and was not correct 2/4 Joumalize the payment of the note at maturity as it should have been joumalized. Don't forget to include the date. Assume a 360-day year PAGE 25 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. EQUITY DEBIT ASSETS LIABILITIES CREDIT 1 2 3 Installment Note The following journal entry was made by your predecessor to record the annual payment on a 5%, 10-year installment note. PAGE 22 JOURNAL ACCOUNTING EQUATION DATE POST REF DESCRIPTION DERIT CREDIT ASSETS LIABILITIES EQUITY Oct. 1 1 + Interest Expense 710 178,300.00 524.262.00 2 1 215 Notes Payable 3 Cash 110 702.562.00 1 Using the information provided, computo the following amounts. 1. What was the carrying amount (book value) of the installment note before the payment on October 1? $ 2. What portion of next year's payment will be interest? (Round the amount to the nearest dollar) $ Warranty Copperfield and Company has decided to provide a warranty on its products. The previous clerk left a note with the files on this new warranty on glass breakage, deciding that an entry for warranty expense "Our product is the finest in the world, and thus the contingency of a warranty replacement for breakage is remote. Under accounting standards, the proper treatment for a remote likelihood of occurrence is to journal entry should be made for warranty expense." You should review the previous clerk's notes and evaluate the decision. After refreshing your memory on the treatment of contingent liabilities, what action will you take? Make no entry, the previous clerk is correct that there is a remote chance of any breakage, Journalize an adjusting entry debiting Product Warranty Expense and crediting Product Warranty Payable. Assume that a reasonable estimate of the warranty cost can be determined by an exam Since there's no way to accurately determine the amount of breakage that might occur, no entry or disclosure is required. Make no entry, but disclose the possible warranty liability amount in the notes to the company financial statements