Current Liabilities and Payroll Accounting

On January 1, 2019, the ledger of Accardo Company contains the following liability accounts.

The following are selected transactions of Blanco Company. Blanco prepares financial statements quarterly.

Jan. 2Purchased merchandise on account from Nunez Company, $30,000, terms 2/10, n/30. (Blanco uses the perpetual inventory system.)
Feb. 1Issued a 9%, 2-month, $30,000 note to Nunez in payment of account.
Mar. 31Accrued interest for 2 months on Nunez note.
Apr. 1Paid face value and interest on Nunez note.
July 1Purchased equipment from Marson Equipment paying $11,000 in cash and signing a 10%, 3-month, $60,000 note.
Sept. 30Accrued interest for 3 months on Marson note.
Oct. 1Paid face value and interest on Marson note.
Dec. 1Borrowed $24,000 from the Paola Bank by issuing a 3-month, 8% note with a face value of $24,000.
Dec. 31Recognized interest expense for 1 month on Paola Bank note

Instructions

  1. Prepare journal entries for the listed transactions and events.
  2. Post to the accounts Notes Payable, Interest Payable, and Interest Expense.
  3. Show the balance sheet presentation of notes and interest payable at December 31.
  4. What is total interest expense for the year?

Mann Hardware has four employees who are paid on an hourly basis plus time-and-a-half for all hours worked in excess of 40 a week. Payrolll data for the week ended March 15, 2019, are presented below.

Abel and Hager are married. They claim 0 and 4 withholding allowances, respectively. The following tax rates are applicable: FICA 7.65%, state income taxes 3%, state unemployment taxes 5.4%, and federal unemployment 0.8%.

Instructions

  1. Prepare a payroll register for the weekly payroll. (Use the wage-bracket withholding table in the text for federal income tax withholdings.).
  2. Journalize the payroll on March 15, 2019, and the accrual of employer payroll taxes.
  3. Journalize the payment of the payroll on March 16, 2019.
  4. Journalize the deposit in a Federal Reserve bank on March 31, 2019, of the FICA and federal income taxes payable to the government.

The following payroll liability accouns are included in the ledger of Harmon Company on January 1, 2019


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For the year ended December 31, 2019, Denkinger Electrical Repair Company reports the following summary payroll data.


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C.S. Lewis Company had the following transactions involving notes payable.


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On June 1, Merando Company borrows $90,000 from First Bank on a 6-month, $90,000, 8% note


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In performing accounting services for small businesses, you encounter the following situations pertaining to cash sales.


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Moreno Company publishes a monthly sports magazine, Fishing Preview, Subscriptions to the magazine cost $20 per year. During November 2019, Moreno sells 15,000 subscriptions beginning with the December issue, Moreno prepares financial statements quarterly and recognizes subscription revenue at the end of the quarter. The company uses the accounts Unearned Subscription Revenue and Subscription Revenue.


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Betancourt Company sells automaticcan openers under a 75-day warranty for defective merchandise, Based on past experience, Betancourt estimates that 3% of the units sold will become defective during the warranty period, Management estimates that the average cost of replacing or repairing a defective unit is $15. The units sold and units defective that occurred during the last 2 months of 2019 are as follows.


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