Question 1:
SFCC Corporation has 8 employees. Information about the October payroll follows:
| Name |
|
Hours Worked |
|
Pay Rate |
|
Federal Income
Tax Withheld |
| Breschi, K |
|
95 |
|
$12 per hour |
|
$200 |
| Carballo, P |
|
n/a |
|
$3,000 per month |
|
$850 |
| Dangelo, J |
|
180 |
|
$14 per hour |
|
$625 |
| Gaines, T |
|
n/a |
|
$4,500 per month |
|
$1,100 |
| Goseco, M |
|
n/a |
|
$10,100 per month |
|
$3,575 |
| Skolnick, J |
|
180 |
|
$12 per hour |
|
$480 |
| Williams, R |
|
172 |
|
$9 per hour |
|
$140 |
| Wong, O |
|
195 |
|
$16 per hour |
|
$800 |
Additional information is as follows:
SFCC is in a state without an income tax. Employees' federal income tax withholdings depend on various factors, and the amounts are as indicated in the above table.
No employees worked overtime, with the exception of Oscar Wong, who worked 15 hours of overtime. Overtime is paid at 150% of the normal hourly rate.
Assume that gross pay is subject to social security taxes at a 6.5% rate, on an annual base of $100,000. Assume that Medicare/Medicaid taxes are 1.5% of gross earnings. These taxes are matched by the employer. Only Marcia Goseco had earned more than $90,000 during the months leading up to October. She had earned $90,900 during that time period.
SFCC has 100% participation in a $10 per month employee charitable contribution program. These contributions are withheld from monthly pay.
SFCC pays for workers' compensation insurance at a 2% of gross pay rate. None of this cost is paid by the employee.
SFCC provides employees with a group health care plan; however, the cost is fully paid by employees. The rate is $250 per month, per employee.
SFCC's payroll is subject to federal (0.5%) and state (1.5%) unemployment taxes on each employee's gross pay, up to $8,000 per year. All employees had earned in excess of $8,000 in the months leading up to October, with the exception of Karen Breschi. Karen was first employed during the month of October.
SFCC contributes 5% of gross pay to an employee retirement program. Employees do not contribute to this plan.
(a) Complete the payroll schedule on the accompanying blank worksheet.
(b) Prepare journal entries for SFCC's payroll and the related payroll expenses.
Question 2:
Krull Corporation presented the following selected information. The company has a calendar year end.
"Before considering the effects of dividends, if any, Krull's net income for 20X7 was $2,500,000."
"Before considering the effects of dividends, if any, Krull's net income for 20X8 was $3,000,000."
"Krull declared $750,000 of dividends on November 15, 20X7. The date of record was January 15, 20X8. The dividends were paid on February 1, 20X8."
"Stockholders' equity, at January 1, 20X7, was $5,000,000. No transactions impacted stockholders' equity throughout 20X7 and 20X8, other than the impact of earnings and dividends on retained earnings."
(a) Prepare journal entries, if needed, to reflect the dividend declaration, the date of record, and the date of payment.
(b) How much was net income for 20X7 and 20X8?
(c) How much was total equity at the end of 20X7 and 20X8?
(d) Is total "working capital" reduced on the date of declaration, date of record, and/or date of payment?
Question 3:
Kenya Corporation had an equity structure that consisted of $1 par value common stock, $3,500,000; paid-in capital in excess of par, $17,500,000; and retained earnings, $22,700,000.
Transaction A
Believing that its share price was depressed due to general market conditions, Kenya's board of directors authorized the reacquisition of 250,000 shares of common stock. These treasury shares were purchased at $10 per share."
Transaction B
Subsequent to Transaction A, the stock price increased to $17 per share, and half of the treasury shares were sold in the open market."
Transaction C
Subsequent to Transaction B, Kenya experienced business difficulties that necessitated it selling the remaining treasury shares to raise additional cash. The shares were sold for $6 per share."
(a) Assuming that all 3,500,000 shares of Kenya were issued at the same time and at the same price per share, what was the original issue price? How does this compare to the price paid in Transaction A, and is it rational for a company to pay more to buy back shares than it originally received upon the initial issuance?
(b) Prepare an appropriate journal entry to record Transaction A. Kenya records treasury shares at cost.
(c) Prepare an appropriate journal entry for Transaction B.
(d) Prepare an appropriate journal entry for Transaction C.
Attachment:- Acc.zip