Question 1

An employee earns $9,450 for the current period. The cumulative earnings of previous pay periods is $110,000. Social security tax applies to the first $117,000 of employee earnings. Calculate the total and individual amounts to be withheld for social security (6.2%), Medicare (1.45%) and federal income tax (15%).

Accepted Answer

The answer of An employee earns $9,450 for the current...

Question 2

A company has three employees. Total salaries for the month of January were $8,000. The federal income tax rate for all employees is 15%. The FICA-social security tax rate is 6.2% and the FICA-Medicare tax rate is 1.45%. Calculate the amount of employee taxes withheld and prepare the company's journal entry to record the January payroll assuming these were the only deductions.

Accepted Answer

The answer of A company has three employees. Total salaries...

Question 3

Santa Barbara Express has 4 sales employees, each of whom earns $5,000 per month and is paid on the last working day of the month. Each employee's wages are subject to FICA social security taxes of 6.2% and Medicare taxes of 1.45% on all wages. Withholding for each employee also includes federal income tax of 16% and monthly medical insurance premiums of $110 for each employee.
a. Prepare the general journal entry to accrue the monthly sales salaries expense at January 31.
b. The employer payroll taxes for Santa Barbara Express include FICA taxes, federal unemployment taxes of 0.6% of the first $7,000 paid each employee, and state unemployment taxes of 4.0% of the first $7,000 paid to each employee. Prepare the journal entry to record the employer's payroll taxes at January 31 for Santa Barbara Express. (Assume that none of the employees has reached the unemployment limit of $7,000.)

Accepted Answer

The answer of Santa Barbara Express has 4 sales employees,...

Question 4

General Co. entered into the following transactions involving short-term notes payable.
On May 14, General purchased $40,000 merchandise from Steller Co., terms are 2/15, n/30. General uses the perpetual inventory system. On May 29, General replaced the May 14 account payable with a 60-day, $36,000 note bearing 8% annual along with paying $4,000 in cash. On July 28, General paid the amount due on the note at maturity.
Prepare journal entries for all the preceding transactions and events.

Accepted Answer

The answer of General Co. entered into the following transactions...

Question 5

A company borrowed $60,000 by signing a 60-day, 5% note payable from its bank. Compute the total cash payment due on the note's maturity date.

Accepted Answer

The answer of A company borrowed $60,000 by signing a...

Question 6

The payroll records of a company provided the following data for the current weekly pay period ended March 12. $$\begin{array} { | l | r | r | r | r | r | r | } 
\hline \text { Employees } & \begin{array} { r } 
\text { Earnings } \
\text { to End of } \
\text { Previous } \
\text { Week }
\end{array} & \begin{array} { r } 
\text { Gross } \
\text { Pay }
\end{array} & \begin{array} { r } 
\text { Federal } \
\text { Income } \
\text { Taxes }
\end{array} & \begin{array} { r } 
\text { Medical } \
\text { Insurance } \
\text { Deduction }
\end{array} & \begin{array} { r } 
\text { Union } \
\text { Dues }
\end{array} & \begin{array} { r } 
\text { United } \
\text { Way }
\end{array} \
\hline \text { D. Hui } & \$ 5,800 & \$ 800 & \$ 120 & \$ 35 & \$ 10 & \$ 10 \
\hline \text { B. Kim } & 6850 & 1,100 & 180 & 35 & 10 & 15 \
\hline \text { C. Sly } & 12,900 & 1,440 & 404 & 35 & 10 & 40 \
\hline
\end{array}$$ Assume that the Social Security portion of the FICA taxes is 6.2% on the first $117,000 and the Medicare portion is 1.45% of all wages paid to each employee for this pay period. The federal and state unemployment tax rates are 0.8% and 5.4%, respectively, on the first $7,000 paid to each employee. Calculate the net pay for each employee.

Accepted Answer

The answer of The payroll records of a company provided...

Question 7

A company sells its product subject to a warranty that covers the cost of parts for repairs during the six months after the date of sale. Warranty costs are estimated to be 5% of sales. During the month of July, the company performed warranty work and used $11,000 of parts to perform the warranty work. Sales for July were $450,000.
1. Record the warranty expense for the month of July.
2. Record the costs of the warranty work completed in June.
3. If the Estimated Warranty Liability account had a credit balance of $10,000 on May 31, what is the account balance at June 30?

Accepted Answer

The answer of A company sells its product subject to...

Question 8

Early Co. offers its employees a bonus equal to 2% of the company's net income. The estimated net income for the year is expected to be $800,000. Prepare the general journal entry to record the estimated employee bonus plan expense.

Accepted Answer

The answer of Early Co. offers its employees a bonus...

Question 9

The payroll records of a company provided the following data for the weekly pay period ended December 7: $\begin{array}{|l|r|r|r|r|r|r|}
\hline \text { Employee } & \begin{array}{r}
\text { Earnings } \
\text { to End of } \
\text { Previous } \
\text { Week }
\end{array} & \begin{array}{r}
\text { Gross } \
\text { Pay }
\end{array} & \begin{array}{r}
\text { Federal } \
\text { Income } \
\text { Taxes }
\end{array} & \begin{array}{r}
\text { Medical } \
\text { Insurance } \
\text { Deduction }
\end{array} & \begin{array}{r}
\text { Union } \
\text { Dues }
\end{array} & \begin{array}{r}
\text { United } \
\text { Way }
\end{array} \
\hline \text { Ronald Arthur } & \$ 54,000 & \$ 1,200 & \$ 216 & \$ 125 & \$ 15 & \$ 15 \
\hline \text { John Baines } & 40,500 & 900 & 162 & 125 & 15 & 30 \
\hline \text { Ted Carter } & 45,000 & 1,000 & 180 & 150 & 0 & 20 \
\hline
\end{array}$ The FICA social security tax rate is 6.2% and the FICA Medicare tax rate is 1.45% on all of this week's wages paid to each employee. The federal and state unemployment tax rates are 0.8% and 5.4%, respectively, on the first $7,000 paid to each employee. Prepare the journal entries to (a) accrue the payroll and (b) record payroll taxes expense.

Accepted Answer

The answer of The payroll records of a company provided...

Question 10

A company sells tablet computers for $1,300 each. The price includes a two-year warranty. During the current year, the company sells 400 tablets. On the basis of past experience, the warranty costs are estimated to be $280 per tablet. The actual warranty costs (paid in cash) by the company during the current year were $65,000. Prepare general journal entries to record the (a) estimated warranty expense and (b) warranty repair costs during current year.

Accepted Answer

The answer of A company sells tablet computers for $1,300...

Question 11

A company's payroll for the week ended May 15 included earned salaries of $20,000. All of that week's pay is subject to FICA social security taxes of 6.2% and Medicare taxes of 1.45%. In addition, the company withholds the following amounts for this weekly pay period: $900 for medical insurance, $3,400 for federal income taxes, and $180 for union dues.
a. Prepare the general journal entry to accrue the payroll.
b. The company is subject to state unemployment taxes at the rate of 2% and federal unemployment taxes at the rate of 0.6%.
By May 15, some employees had earned over $7,000, so only $11,000 of the $20,000 weekly gross pay was subject to unemployment tax. Prepare the general journal entry to accrue the employer's payroll tax expense.

Accepted Answer

The answer of A company's payroll for the week ended...

Question 12

An employer has an employee benefit package that includes employer-paid health insurance and an employer-paid retirement program. During March, the employer paid $5,500 for health insurance, and contributed to the employee retirement program 10% of the employees' $120,000 gross salaries. Prepare the journal entry to record these employee benefits.

Accepted Answer

The answer of An employer has an employee benefit package...

Question 13

Calculate the total amount of FICA withholding for an employee whose pay is $2,400 for the first pay period of the year. The tax rate for FICA-Social Security is 6.2% and the tax rate for FICA-Medicare is 1.45%.

Accepted Answer

The answer of Calculate the total amount of FICA withholding...

Question 14

A company's employer payroll tax rates are 0.6% for federal unemployment taxes, 5.4% for state unemployment taxes, 6.2% for FICA social security taxes on earnings up to $117,000, and 1.45% for FICA Medicare taxes on all earnings. Compute the W-2 Wage and Tax Statement information required below for the following employees: $$\begin{array} { | l | r | r | } 
\hline \text { Employee } & \text { Gross Earnings } & \text { Federal Inoome Taxes Withheld } \
\hline \text { A. Baylor } & \$ 14,000 & \$ 17,600 \
\hline \text { C. Jasmine } & 52,000 & 8,200 \
\hline
\end{array}$$ $\begin{array}{|l|r|r|} 
\hline& \text { A. Baylor } & \text { C. Jasmine } \
\hline \text { W-2 Information:}&\_\_\_\_&\_\_\_\_\
\hline \text {Feder al Inoome Tax Withheld }&\_\_\_\_&\_\_\_\_\
\hline \text { Wages, Tips, Other Compensation}&\_\_\_\_&\_\_\_\_\
\hline \text { social Security Tax Withheld}&\_\_\_\_&\_\_\_\_\
\hline \text { social Security Wages}&\_\_\_\_&\_\_\_\_\
\hline \text {Medicare Tax withheld }&\_\_\_\_&\_\_\_\_\
\hline \text { Medicare Wages}&\_\_\_\_&\_\_\_\_\
\hline
\end{array}$

Accepted Answer

The answer of A company's employer payroll tax rates are...

Question 15

A company's employees had the following earnings records at the close of the current payroll period: 
$$\begin{array} { | l | r | r | } 
\hline \text { Employees } & \text { Earning through Prior Pay Period } & \text { Earning this Pay Period } \
\hline \text { F. Argent } & \$ 11,300 & \$ 3,900 \
\hline \text { A. Garza } & 6,100 & 2,500 \
\hline \text { L. Hong } & 9,500 & 3,100 \
\hline \text { R. Levinson } & 4,800 & 1,400 \
\hline \text { J. Young } & 10,000 & 3,000 \
\hline
\end{array}$$ The company's payroll taxes expense on each employee's earnings includes: FICA Social Security taxes of 6.2% on the first $117,000 of earnings plus 1.45% FICA Medicare on all wages; 0.6% federal unemployment taxes on the first $7,000; and 2.5% state unemployment taxes on the first $7,000. Compute the employer's total payroll taxes expense for the current pay period.

Accepted Answer

The answer of A company's employees had the following earnings...

Question 16

Cardinal Company sells merchandise for $24,000 cash on March 31 (cost of merchandise is $12,300). The sales tax law requires Cardinal to collect 8.5% sales tax on every dollar of merchandise sold. Record the entry for the sale and its applicable sales tax.

Accepted Answer

The answer of Cardinal Company sells merchandise for $24,000 cash...

Question 17

A company sells sofas with a 6-month warranty. In January, the company sold 100,000 sofas at $1,750 each; and 500 sofas needed repairs during that same month. The total repairs amounted to $85,000 costs from the upholstery materials inventory. It is estimated that 2% of all units sold will need repairs under warranty at an estimated cost of $200 per unit. Prepare the journal entries to record (a) estimated warranty expense for January and (b) warranty repair costs for January.

Accepted Answer

The answer of A company sells sofas with a 6-month...

Question 18

On January 31, Ransom Company's payroll register showed that its employers earned $30,320 of office salaries and $82,750 of sales salaries. Withholdings from the employees' salaries include FICA Social Security taxes as the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, $16,960 of federal income taxes, $3,350 of medical insurance deductions (which represents 50% of the total cost of the employee medical insurance), and $4,210 of 401(k) retirement contribution deductions. Ransom Company pays the other 50% of the employee insurance cost and matches the employee 401(k) contributions. Several employees earned more than $7,000 for the period which reduced salaries subject to unemployment to $104,000. No employees exceeded the FICA-Social Security taxable wage base.
1. Prepare the journal entry to record Ransom Company's January 31 payroll expenses and liabilities.
2. Prepare the journal entry to record Ransom Company's employer payroll taxes resulting from the January 31 payroll. Ransom's merit rating reduces its state unemployment (SUTA) to 4% of the first $7,000 paid each employee. The federal unemployment tax (FUTA) rate is 0.6%.
3. Prepare the journal entry to record Ransom's additional employee expenses.

Accepted Answer

The answer of On January 31, Ransom Company's payroll register...

Question 19

A company has 90 employees and a weekly payroll of $117,000. The FICA-social security tax withheld totals $7,254 and the FICA-Medicare tax withheld totals $1,696.50. The total withholding for federal income tax is $16,500. Prepare the journal entry to accrue this week's salaries expense and withholdings.

Accepted Answer

The answer of A company has 90 employees and a...

Question 20

Star Recreation receives $48,000 cash in advance ticket sales for 12 home games. Record the advance ticket sales on April 30. Record the revenue earned for the first home game played on August 14.

Accepted Answer

The answer of Star Recreation receives $48,000 cash in advance...

Quiz 9: Accounting for Current Liabilities

A company borrowed $60,000 by signing a 60-day, 5% note payable from its bank. Compute the total cash payment due on the note's maturity date.

Early Co. offers its employees a bonus equal to 2% of the company's net income. The estimated net income for the year is expected to be $800,000. Prepare the general journal entry to record the estimated employee bonus plan expense.

Calculate the total amount of FICA withholding for an employee whose pay is $2,400 for the first pay period of the year. The tax rate for FICA-Social Security is 6.2% and the tax rate for FICA-Medicare is 1.45%.

Cardinal Company sells merchandise for $24,000 cash on March 31 (cost of merchandise is $12,300). The sales tax law requires Cardinal to collect 8.5% sales tax on every dollar of merchandise sold. Record the entry for the sale and its applicable sales tax.

Star Recreation receives $48,000 cash in advance ticket sales for 12 home games. Record the advance ticket sales on April 30. Record the revenue earned for the first home game played on August 14.