Bus230AChpt9Solutions[1]

Bus230AChpt9Solutions[1] - E9-3ARecord Salaries Expense and...

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Unformatted text preview: E9-3ARecord Salaries Expense and Salaries Payable. Salaries expense$50,000 less: United Way contribution(500)less: federal income tax(10,000)less: FICA(3,100)less: Medicare taxes(725)Salaries payable$35,675Salaries expense50,000 United Way payable500Social security tax payable3,100Medicare taxes payable725Federal income tax payable10,000Salaries payable35,675E9-4Aa.Record estimated Warranty Liability at Dec. 31.No. of puppies1,500 Percent w/ vet bills10%150 x Average bill$100Est. warranty liability$15,000Journal entry:DebitCreditWarranty Expense15,000Estimated Warranty Liability15,000b.Record payment of the vet bill on March 30, 2007.Journal entry:DebitCreditEstimated Warranty Liability50Cash50c.How did this payment effect financial statements?The entry decreased current assets and current liabilities on the balance sheet but had no impact on income statement.E9-5Aa.What is the amount of interest expense related to this loan for 2006?Principalx Ratex Time=Interest Expense$100,000 x 9%x 1 year =$9,000b.What amount of liability should appear on the December 31, 2006 balance sheet?1st payment:Bal. in long-term liabilities:Principal$2,000 (plug)Principal$100,000Interest9,000 Less:Total payment $11,000payment on principal (2,000)Balance due$98,000c.What is the amount of interest expense related to this loan for 2007?Principalx Ratex Time=Interest Expense$98,000 x 9%x 1 year = $8,820d.What amount of liability should appear on the December 31, 2007 balance sheet?1st payment:Bal. in long-term liabilities:Principal$2,180 (plug)Principal$98,000Interest8,820 Less:Total payment $11,000payment on principal (2,180)Balance due$95,820E9-11APrepare the journal entries to record:a.The bond issue.1-JanCash200,000Bonds Payable200,000b.The accrual of interest on December 31.31-DecInterest expense20,000Interest payable20,000$200,000 x 10%x 1 year =$20,000 c.The payment of interest on January 1.1-JanInterest payable20,000Cash20,000E9-12Aa.What are the interest payments for the first 2 years?...
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This note was uploaded on 04/16/2008 for the course BUS 230A taught by Professor S during the Spring '08 term at Sonoma.

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Bus230AChpt9Solutions[1] - E9-3ARecord Salaries Expense and...

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