Current Liabilities
New Wave Co. sold 19,000 annual subscriptions of Game Life for $55 during December 2014. These new subscribers will receive monthly issues, beginning in January 2015. In addition, the business had taxable income of $660,000 during the first calendar quarter of 2015. The federal tax rate is 40%. A quarterly tax payment will be made on April 7, 2015.
Prepare the Current Liabilities section of the balance sheet for New Wave Co. on March 31, 2015.
Entries for Notes Payable
A business issued a 90-day, 6% note for $54,000 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. Assume a 360-day year
For a compound transaction, if an amount box does not require an entry, leave it blank.
Fixed Asset Purchases with Note
On June 30, Rioux Management Company purchased land for $640,000 and a building for $960,000, paying $800,000 cash and issuing a 7% note for the balance, secured by a mortgage on the property. The terms of the note provide for 20 semiannual payments of $40,000 on the principal plus the interest accrued from the date of the preceding payment.
For a compound transaction, if an amount box does not require an entry, leave it blank.
a. Journalize the entry to record the transaction on June 30.
b. Journalize the entry to record the payment of the first installment on December 31.
c. Journalize the entry to record the payment of the second installment the following June 30.
1.) Calculate Payroll
An employee earns $36 per hour and 1.5 times that rate for all hours in excess of 40 hours per week. Assume that the employee worked 55 hours during the week, and that the gross pay prior to the current week totaled $52,200. Assume further that the social security tax rate was 6.0%, the Medicare tax rate was 1.5%, and federal income tax to be withheld was $518.
If required, round your answers to two decimal places.
a. Determine the gross pay for the week.
b. Determine the net pay for the week.
2.) Payroll Entries
The payroll register for Robinson Company for the week ended November 18 indicated the following:
Salaries $678,000
Social security tax withheld 31,866
Medicare tax withheld 10,170
Federal income tax withheld 135,600
In addition, state and federal unemployment taxes were calculated at the rate of 5.2% and 0.8%, respectively, on $13,000 of salaries.
For a compound transaction, if an amount box does not require an entry, leave it blank.a. Journalize the entry to record the payroll for the week of November 18.
b. Journalize the entry to record the payroll tax expense incurred for the week of November 18.
3.) Accrued Product Warranty
Lachgar Industries warrants its products for one year. The estimated product warranty is 4% of sales. Assume that sales were $228,000 for September. In October, a customer received warranty repairs requiring $155 of parts and $95 of labor.
For a compound transaction, if an amount box does not require an entry, leave it blank.
a. Journalize the adjusting entry required at September 30, the end of the first month of the current fiscal year, to record the accrued product warranty.
b. Journalize the entry to record the warranty work provided in October.
4.) Liability Transactions
The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year:
Feb. 15. Purchased merchandise on account from Hood Co., $408,000, terms n/30.
Mar. 17. Issued a 60-day, 8% note for $408,000 to Hood Co., on account.
May 16 Paid Hood Co. the amount owed on the note of March 17.
June 15. Borrowed $166,800 from Acme Bank, issuing a 60-day, 9% note.
July 21. Purchased tools by issuing a $102,000, 90-day note to Columbia Supply Co., which discounted the note at the rate of 9%.
Aug. 14. Paid Acme Bank the interest due on the note of June 15 and renewed the loan by issuing a new 60-day, 10% note for $166,800. (Journalize both the debit and credit to the notes payable account.)
Oct. 15. Paid Acme Bank the amount due on the note of August 14.
Oct. 19. Paid Columbia Supply Co. the amount due on the note of July 21.
Dec. 1. Purchased office equipment from Mountain Equipment Co. for $144,000, paying $24,000 and issuing a series of ten 6% notes for $12,000 each, coming due at 30-day intervals.
Dec. 12. Settled a product liability lawsuit with a customer for $71,000, payable in January. Emerald Bay accrued the loss in a litigation claims payable account.
Dec. 31. Paid the amount due Mountain Equipment Co. on the first note in the series issued on December 1.