Brief Exercise 13-5
Sport Pro Magazine sold 13,320 annual subscriptions on August 1, 2014, for $24 each. Prepare Sport Pro's August 1, 2014, journal entry and the December 31, 2014, annual adjusting entry, assuming the magazines are published and delivered monthly.
Exercise 13-8
The payroll of YellowCard Company for September 2013 is as follows.
Total payroll was $460,500, of which $145,400 is exempt from Social Security tax because it represented amounts paid in excess of $106,800 to certain employees. The amount paid to employees in excess of $7,000 was $390,200. Income taxes in the amount of $86,740 were withheld, as was $8,120 in union dues. The state unemployment tax is 3.5%, but YellowCard Company is allowed a credit of 2.3% by the state for its unemployment experience. Also, assume that the current FICA tax is 7.65% on an employee's wages to $106,800 and 1.45% in excess of $106,800. No employee for YellowCard makes more than $125,000. The federal unemployment tax rate is 0.8% after state credit.
Prepare the necessary journal entries if (a) the wages and salaries paid and (b) the employer payroll taxes are recorded separately.
Problem 13-1
Described below are certain transactions of Edwardson Corporation. The company uses the periodic inventory system.
1. On February 2, the corporation purchased goods from Martin Company for $78,400 subject to cash discount terms of 3/10, n/30. Purchases and accounts payable are recorded by the corporation at net amounts after cash discounts. The invoice was paid on February 26.
2. On April 1, the corporation bought a truck for $67,000 from General Motors Company, paying $3,000 in cash and signing a one-year, 10% note for the balance of the purchase price.
3. On May 1, the corporation borrowed $130,800 from Chicago National Bank by signing a $140,760 zero-interest-bearing note due one year from May 1.
4. On August 1, the board of directors declared a $311,000 cash dividend that was payable on September 10 to stockholders of record on August 31.
Make all the journal entries necessary to record the transactions above using appropriate dates.
Edwardson Corporation's year-end is December 31. Assuming that no adjusting entries relative to the transactions above have been recorded, prepare any adjusting journal entries concerning interest that are necessary to present fair financial statements at December 31. Assume straight-line amortization of discounts.