CH11.CurrentLiabilities&PayrollAccounting.docx

CH11.CurrentLiabilities&PayrollAccounting.docx -...

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Unformatted text preview: Chapterfl - Homework 0 smminad 100fl00 Total palm awarded Help Ext: 1 Exercise 11-3 Accounting for note payable LO H A mare-nor System; borrows $64,000 cash on May15, 2017, 0y srgnrng a may, 5% note. 10.10 points 3mm 1. On what date does tnls note rnamre? : t July13, 201:! @1 July14, 2017 El - j . July15, 2017 m ' I ‘ JIJIY16. 2017 - Z ‘ Julyfi', 2017 lel 2. Amme the face value oflhe note equals $64,000, the pnnclpal ofme loan. 3 [a] Prepare mejou'nal errlryto record Issuame ofme note. 1 M ay 15 Cas h v 64000 Notes payable v 64000 (b) Flrst, con'plete the able below to calcuate the Interest expense at manmly. Use those calculated values to prepae ywrjml enuyto record paymemofmemteatnmttlseafiodaysa yet. Mflammmmmdedolml Pri n oi pal 5 64000 Rate (as) 5% Time soresq v Total interest 5% 533 flex 1 0f 9 ll .Next > Chaptetfl - Homework 0 5mm 100mm Total pom awarded Help Exit 1 .. (b) Flrst, con'plete the Eble below to calculate the Interest expense at maluny. Use those calculated values to prepa'e yourjcunal erluyto record 10:10 paymemofmemteatnfinmflkeamdnysa”Mflammmmmmdofll Pri n cl pal S 54900 !| Rate (ea) 5% £00k Time 601354 'v Total interest 5 533 Hrrl Pm 1 1 Interest expense 'v 533 Notes payable v 64,000 Cash v 64,513 Explanaflon Mammy date = May 15 + 50 days =me u, 201?. flex 1 0f 9 ll Next > Chapterfl - Homework 0 Stamina! 100mm Total perms awarded Help Exit 2 .. Rented Inforrnulon RIM 01‘3 Use the following information for the Exertises below. _ [The Way Warren miles to the 91mm Maya! berm] 11m BMX Germany has one employee. FICA 91ml Secumy lanes are 5.2%ofrre first $118,500 paid to us employee, and FICA Medeare mes pain; awarded are 1.45% of gross pay. For BMX, rrs FUTA lanes are 0.6% and SUTAtaxe-s are 29% ohm fist $7,000 para 10 n5 employee. Gross Pay Gross Pay for through August. September a . $ 6, a G 0 $ 'T L] l] h . l a , 60 0 2, 5 0 l] (2. 112,600 3,400 Exercise 11-5 Computing payroll taxes L0 P2, P3 Cormute BMX'S amounts for each ollrlese four mes as applied to me errplayee's gram earrings for September under each Dflhree separzme muons (aub), and (cl. (Rome wurenmstoZdedm-l places.) FICA—Sod al Secu n'iy FICA—M edicare FUTA SUTA 10.15 1.20 FICA—Sod al Secu rimI FICA—M edicare 36.25 FUTA SUTA _m_ < Erev 2 3 4 lore II Next. > ChapteIfl-Homawork 0 5mm 100,000 Total pamawamed Help Exll amuumucumul I «- ”mum u.Lum|—w “mm A Reqliedinfmnafion SUTA L 5.80 HrI‘IOfE _ 11m FICA—Sod al Secu r11}! 'msawarded . b 9" FICA—Medicare 36.25 FUTA ’ SUTA dink FICA—Social Security @ FICA—Medicare 121.80 Hl'rl FUTA a SUTA Pll'l Explanaflon Subject to Tax Rate Tax Explanation (a) FICA—Social SecurityS 700 6.20 % $ £13.90 Full amount is subject to tax. FICA—Medicare 700 1.45 10.15 Full amount is subject to tax. FIJTA 200 0.60 1.20 $500 is over the maximum. SUTA 200 2.90 5.80 $500 is over: the maximum. (1:) FICA—Social Security $2,500 6.20 % $155.00 F1111 amount is subject to tax. Flfl%edicare 2,500 1.45 36.25 Full amount is subject to tax. E'UTA 0 0.60 0.00 Full amount is over: maximum. SUTA 0 2.90 0.00 Full amount is over maximum. (c) FICA—Social Security $5,900 6.20 % $565.80 $2,500 is over the maximum. FICA—Medicare 8,400 1.45 121.80 Full amount is subject to tax. FUTA 0 0.60 0.00 Full amount is over maximum. SUTR 0 2.90 0.00 Full amount is over maximum. < .P 2 3T|or9 II Next > Chapterfl - Homework 0 Stamina! 100,000 Total pom awarded Help Exit 3 A Rented Inforrnulon ““2 of 3 Use the following information for the Exertises below. — [The forll'anmg WW miles to the gum Mayer! berm] 11m BMX {Zorrpany has one employee. FICA Sacral Security lanes. are leofrre first $118,500 paid to Its employee, and FICA Meucare mes pdmg awarded are 1.45% of gross pay. For BMX, FEE FUTA lanes are 0.6% and SUTAtaxe-s are 7.9% more fist $7,000 paid 10 in; employee. Gmee Pay Grade Pay for through August September a . $ 6, a G 0 $ 'T l] l] h . l a , 60 0 2, 5 0 l] (2. 112,600 3,400 Exercise 11-6 Payroll-related journal entries L0 P2 Aesunlr‘g smanon a, prepare the employer's Septen'berElD pumal enmes to record mlary expense and Its relied payroll Ilabllmes for 111E; employee. The en'floyee‘s fedeml Income taxes wnj'lheld by the employer are $70 for 11115 pay penod. {lieu-Id you ensures“: Zdechrel places.) Federal income tax 55 70.00 lCA—Socral Security v a; mo ()0 6 20% 43 4044111: ISA—Medicare v 700.00 1.45% 10.15pm: E Total taxes withheld as 12355 ‘l Sen-30 Salaries expense I I l FICA—Social sec. taxes payable < Brett l—3m4—lof9 II Next > Chaptet 11 - Homework 0 SLIII'I'IM 3 ommd infunnafion HrIZDTB 11m pains awarded 1 Sep30 Salaries expense 'v 700.00mm: !| FICA—Social sec. laxes payable v 43.4%: 33‘“ FICA—Medicare taxes payable - 1015...“. Employee fed. inc. taxes payable v 70.0%: @ Salaries payable v 576%: Hl'rl Pll'l Explanation Subj eat to Tax Rate Tax Explanation FICA—Social Security $TDD.DD 6.20% $43.40 Full amount is subject to tax. FICA—Medicare 700.00 1.45% 10.15 E‘ull amount is subject to tax. m Illlts EII'IFIEEE flu" and DEULIEHOHS < .Rlell I—3m4—Ior9 II > 100N00 Total palms awarded Help Shaw my an Chapterfl - Homework 0 5mm 100,000 Total palms awarded Help Exit 4 .. Rented Infurrlfllon FBI“ 01‘3 Use the following information for the Exertises below. — [The forll'anmg Warren miles to me am Mayer! balm] 11m BMX {Zorrpany has one employee. FICA astral Security lanes are 5.2%ofrre first $118,500 paid to us employee, and FICA Meucare mes pen-mg 5mm are 1.45% of grcrss pay. For BMX, rrs FUTA limes are 0.6% and SUTAtaxe-s are 29% ohm fist $7,000 para 10 n5 employee. Gross Pay Gross Pay for through August September a . $ 6, a n o s 7 o n h . 1 a , 60 o 2, 5 o u !| a. 112,600 3,400 dinok g Exercise 11-? Payroll-related journal entries L0 P3 9 AesLmTr'g sltuanon a, prepare the employer's Septen'berElD joumal enmes to record me ermioyaer’s payrol taxes expense and Its related llaollltles. m [Roma your crimson 2 decimal places.) 700.00 700 00 200.00 0.60% 200.00 2.90% Total Payroll Taxes Expense 6.20% ‘l 45% lCHocl al Secu rimI lCA—M edlmre UTA UTA 1015m| 1.2M: ‘l Sep30 Payroll taxes expense | | l FICA—Social sec. taxes payable Chaptetfl - Homework 0 5mm 100,000 Total palms awarded Help Exit Shaw my a 4 _ m. m... we...” mu. 0 " Remind infunnafion 1 Sep 30 Payroll taxes expense v 50.55am FICA—Social sec. laxes payable v 43.404“. FICA—Medicare taxes payable v 10.15.“... Federal unemployment taxes payable v 1.204“: State unemployment taxes payable v 5.8mm Explanaflon 31hj act to Tax Rate Tax mlanation FICA—Social Security $700 . 00 6. 20 % $43 . 40 Full amount is subject to tax. EICHedicare 700 . 00 1 . 45 10 . 15 Full amount is subject to tax. E'UTA 200.00 0.60 1.20 $500 is over the maximum. SUTA 200.00 2.90 5.80 $500 is over: the maximum. Reference llllts Em r | Taxes _m_ |4|or9 II Chapterfl - Homework 0 swarmed 100,000 Total palms awarded Help Exit 5 .. Exercise 11-8 Recording payroll L0 P2, P3 11m The follalmrg monthly data are taken from Rarrlrez Corrpany atJuly 31: Sales salanes. $460,000; Otfioe salaries. $92,000, Federal Income taxes Wm awarded wtit'held, $133,000; State Income lanes withheld. $31,000; Soclal semntytanes wtthheld, $34,224; Medicare lanes wimheld, $8,004; Medical Insurance pren'lun'ls, $11,000; Life Tnsumnce prernllm $3,000; Urlon dues deducted, $5,000; and Salaries subjectto merrployrnent lanes, $58,000. The employee pays 40% ofrnedicfl and life Insuance premiums. Assume that FICA taxes are Identical to those on employees and that SU'lA taxes are 5.4% and FUTAtanes are 0.6% ‘l. a 1 Using the above lnfom'atlon, complete the below table and Prepare thejoumil enmesto record accrued payroll and cash payment ottre net payroll for July. 3. Using the above Information, complete the below table. 1. Record the accmed errployver payroll tmles and all other en'ployer—pald expenses and the cash payrnert ofall liabilities for July-assun'e that FICA traces are Identical to those on employees and that SUTAIaXES are 54% and FUTAtaxles are 0.6% Colmletetllisquesfionhvelfleriigmrmersillhelflfibelow. ReqlandZ Req3 Req4 Using the above i'lformation, complete the Inflow table and Prepare the journal entries to record accrued payrol and rash payment of the net payrol for July. Employee Medical Insurance Payable 5 11,000 40% I 5 4,400 5 6,600 Employee Life Insurance Payable 5 8,000 40% E $ 3,200 b 5 4,800 Recordjoumal enlJ'y for accrued payroll, including employee deductions, for July July 31 Sales salaries expense V 460,000 ce salanes expense V 92,000 v I Explanation Employee Medical Insurance Payable {$11,000 x 40%) = $4,400 Employee Life Insurance Payable [$8,000 x 40%} = $3,200 (Ere! 50f9 I Next) Chapterfl - Homework 0 5mm 100mm Total palms awarded Help Exit Show my an 5 C35“ payment OI I113 I131: payrou [OI m. A Employee Medical Insurance Payable 11"“ Employee Life lnsuran ce Payable Recordjoumal entry for accrued payroll, lndudlng employee deduclmns, for July. El July 31 ’Sales salaries expense V ’ 460,000 b an “Office salaries expense v ’ 92,000 ’ hFICA—Social sec. taxes payable V ’ ’ 34,224 g hFlCllr—Medicare taxes payable V ’ b 8,004 Hfl'l hEmployee fed. inc. taxes payable V ’ ’ 138,000 hEmployee slate inc. taxes payable V ’ ’ 31,000 D LEmployee medical insurance payable V b b 4,400 P'“ tEmployee life insurance payable V ’ ’ 3,200 hEmployee unlon dues payable V F ’ 5,000 ’Salalies payable - ’ ’ 328,172 Record ire cash payment ofsalaries July 31 ’Salan'es payable v ’ 322,172 ’ bCash v ’ ’ 328,172 Explanaflon 1. Employee Medical Insurance Payable {$11,000 >1 40%} = $4,400 Employee Llfe Insurance Payable {$8,000 x 4096} = $3,200 Chapterfl - Homework 0 5mm 100,000 Total pains awarded Help Exit A Reqlandzi Rea?» E R5114 Ushg [he above iiormation, complete [he below table. 11r'11 pains awarded S‘lale Unemploymenl Taxes Payable $ 58,000 5 4% $ 3,132 Federal Unemployment Taxes Payable $ 58000 0 fi‘lfiFSi 348 Explanation 1. Employee Medical Insurance Payable {$11,000 x 40%} = $4,400 Employee Llfe Insurance Payable {$8,000 x 40%} = $3,200 3. finale Unemployment Taxes Payable [558,000 x 5.4%} = $3,132 Fedeml Unerrnlaymem Taxes Payable ($58,000 x 0.6%] = $348 Employee Medical Insurance Payable {$11,000 x 60%] = $6,600 Employee Llfe Insurance Payable {$8,000 x 60%) = $4,800 Reference llllrs Emggrge ml and Deduebons Em r lTflNE'S (Ere! 50f9 I Next) Chapterfl - Homework 0 swarmed 100,000 Total pom awarded Help Exit Show my an IMH'Ield, $133,000; State Income lanes withheld. $31,000; Sontal semnlytanes Mmheld. $34,224; Medcare taxes withheld, $8.004; Medical Insurance a pren'lums. $11,000; Life Insumnce prernlu'ris, $3.000; Urlon dues deducted, $5.01); and Salaries subjectto mermloymem lanes, $58,000. The employee pays 40% ofrnedica and life Insuance premiums. Assume that FICA taxes are Identical to those on employees and mat SUTA lanes are 5.4% and FUTAtaXES are (15% 11m 1. G 2. Using U’IE above Trforrnallon, complete the below table and Prepare thejoumd enmesto record accrued payroll and cash paymem ottt'e net palms awarded MFG" fol JUN- El. Using tile above Triom'iatlor‘i, complete the below table. 4. Record the aocmed errp oyer payroll times and all other en'ployerpald expenses and the cash paymert ofall liabilities for Julyiaswme mat FICA taxes are Identical to those on employees and that SUTAtaioes are 54% and FUTAtanes are 0.6% er — ‘ mu 1 J u |y 31 Payroll taxes expense v 45.708 FICA—Sod al sec. taxes payable v 34.224 g FICA—M edicare taxes payable v 8.004 State unemployment taxes payable v 3.132 a Federal unemployment taxes payable v 348 Pt“ 2 July 31 Employee benefits expense v 11.400 Employee medical insurance payable v 6.600 Employee life insurance payable v 4.800 3 July 31 FICA—Sod al sec. taxes payable v 68.448 FICA—Medicare taxes payable v 16.008 Employee fed. inc. taxes payable v 138.000 Employee state inc. taxes payable v 31.000 Employee medical insurance payable v 11.000 Employee life insurance payable v 8.000 Employee union dues payable v 5.000 State unemployment taxes payable v 3.132 Federal unemployment taxes payable v 348 Cash 7 280.936 Explanation (Ere! 50f9 I Next) Chapterfl - Homework 0 smmined 100,000 Total palms awarded Help Exlt 6 .. Exercise 11-1611 Gross and net pay computation LO P5 Lenny Home, an unmamed ermloyee.wo|1r3 45 mus In the week ended January 12 Hls pay rate Is 514 per how, and hls wages are abject ID no deductions ofl'lerman HCA Social Secunly, FICA Medlcare, and federal Incomelmlea He clalms three wnhholdlng allowances. Conurte hls rEQLIarpay, overtlme pay [for EI'IIS mrrpany, workers earn 150% offl'lelr regLIar rate for hours In excess DfAl-D per weelql, and grams pay. Then compute hls FIG! lax deduction {use 6236for the Social Secunly poruon and 1.45%foru1e Medcare oorllnn], Inoomelax dedx‘IIDn [me me wage bracket wrmholdlng table from Exhlbn 11km, tonal dedumons, and net pay. {Round you Inerrnedne «lemons and final Items In 2 declrnd planes} Regular pay 40 $ 14.00 I 15 560.00 Overtime pay 5 $ 21.00 I 105.00 Erma pay I 665.00 FICA—Sowal Secunty tax deduction b 5 41.23omnl FICA— Medicare lax deducljon ’ 9.54““. Income tall deduction ’ 58.00wml Total deductlons 108 874mm Nel pay F5 5561344101 Explanoflon Regula pay {40 hours a $14} = $560,111) Overnn'e premlum pay {5 hours a [$14- X 150%] = 10511) FICA—Social 5mm dedmnon [62% = $4123 FICA—Medicare tax deduction {145%} = 9.64 Income tax dedxnon [from Exhlbll M6} = 58.00 m III'IIS fippendb: my Payroll Reports. Recom and Procecues (Ere! Golf? I Next) Chaptetfl - Homework 0 swarmed 100,000 Total pom awarded Help Exit 7 A Exercise 11-9 Computing payroll taxes L0 P2, P3 12,112 Meal Cormany has 9 emplayeea HCA final Secumy lanes are 6.3mm firm $118,500 paid to each errdDyee, and F101 Medicare lanes are1_45% of Wm awarded gross pay. FUTA taxes are 0.6% and SUTAumes are 5.4% ofthe first $7,000 pald ID each employee. Cumulame payfot me eu'rem year for each of I15 employees follows. Biplayee Cumulative Pay Employee Cunnlntive Pay Employee Cumulative Pny Ken 5 $ 6,100 Michael M $155,000 Lari. K $120,000 Tim V 60, 700 Erin C 115,400 Kitty 0 45,400 El Steve 5 95.500 Kyle B 125,500 John W 12.500 £00k g I. Compule 1m aanns In U115 able for each errnlayvee. HI?! 3:: 6,100 5% 6,1 ()0 6,100 Tim V 68,100 68,700 7,000 Steve 3 95,500 95,500 7,000 M1chael M 155,000 118,500 7,000 Erin C 115,400 115,400 7,000 Kyle El 125,500 118,500 7,000 Lon K 128,000 118,500 7,000 Kitty 0 45,400 45,400 7,000 John W 12,500 12,500 7,000 Totals 55 752,100 $ 699,100 $ 752,100 5 62,100 5 62,100 b. For the con'pany, mmpule each total for FICA Sadal mum)! lanes, FICA Medlcare taxes, FUTA taxes, and SUTA taxes. mound you-ml mm 2 declrrld places.) FICASodaISecumytaxes 5 43,344.20 $ 43,344.20 $ 86,688.40 FICA Medicare taxes 10,905.45 10,905.45 21,810.90 V < He: 7 I” ll .Nex: > Chaptetfl - Homework 0 5mm 100,000 Total pom awarded Help Exit 7 .. b. For the con'pany, mmpule each total for FICA Sodal Secumy lanes, FICA Medlcare tam FUTA times, and SUTA taxes. Mud you-fl mu: 2 declrnl places) FICASouaI Secuntytaxes 5% 4334420 $ 43,34420lli 86,68840 FICA Medicare taxes 10,905.45 10,905.45- 21 £10.90 El FUTMaxes 372.60 B 372.60 m SUTAtaxes 335340 I 3,353.40 HI'rI Pm Explanaflon b. FICA Social Semnwtaxes $699,100 x 62%= 54334020 FICA Medicare lanes $752,100 a: 1.45% = $10,905.45 FUTAtanes $62,100 x 0.6% = $ 37260 SUTA mes $62,100 K 54% = $ 3,353.40 Reference III'IIS Emglgyge E113" and Dedumona < flex 7 I” ll Nex: > Chapterfl - Homework 0 5mm 100mm Total pom awarded Help Exlt 8 .. Exercise 11-10 Warranty expense and liability computations and entries LO P4 11m l-lnzu Co. sold a muer cost‘Ing $3.500 with a two-year p315 Intarrantyto a customer on August 16. 2017. for $1000 cash. Hllzu uses me perpetual Wm awarded Inventory system On November 22, 2018, the copIer requlres on—stte repalrs that are completed tile same day. The repars cost $119 for rnatenas taken from the repalr parts Trwentory. These are the only repalrs reqmed In MB for thIs mpler. Based on experience, anu expects ID Tncu wananty costs equal to 6% ofdnllar sales It records warranty expense wlm an adjustlng emy atthe end ofeaeh year. 1. How much wanamy expense does the company repnn In 2017 for Ills comer? El 4200 O 2. How much Is me estlmated malty lIaDIIrtyformls caplet as of Deeerrber 31, 201?? S 4209 El. How much warramy expense does the con'pany repon In 2018 for Iris comer? 9! O 0 I. How much Is. me estlmated warranty llmlltyfor tins copler as of DeeerrberEH, 2018'? 5 301° Chapterfl - Homework 0 5mm 100mm Total points awarded Hetp Exll Show correct an 8 — " 1 Augts,20-Ir Cash 0 7,0009 Sales 0 7,000 0 11m points awarded 2 Aug 15,2017 Cost of goods sum 0 3,500 0 Merchandise inventory 0 3,500 o 3 Dec 31, 201? Warranty expense 0 420 0 El Estimated wananly liabIlily Q 420 9 dBm* 4 Nov22, 2018 Estimated warranty IIabIIIty o 119 Q g Repatr pans Inventory 0 119 0 HM p,“ Explanaflon 1 wanamy Expense =6% oidollar sales = 676x $7,000 = $420. 2. The Decerrber 31, 2013', balance ofme llabllrty equals [he expense because no rebarrs are provided In 2017. Therefore, he endlng balance ofme Es‘lln'med Warranty IJablllly acmum ls 542(1 3. The corrpanyr shoud report no adduonal warranty expense In 2018 for title copler. 4. The Decerrber 31, 2018, balance ofme Estlmmed \Manamy Uabllny accent ecpals the 2018 beglnnlng balance rrlrnusflle costs Incurred In 2013 lo repaTr the copler. Ending 201T balance S 420 Leas parts 603: (119) Ending 2018 balance 5 301 (Brett 30f9 I Next) Chapterfl - Homework 0 Stamina! 100,000 Total points awarded Help Exit 9 .. Exercise 11-14 Computing and interpreting times interest earned LO A1 11m Use the folan InfonTtanDn from separate wrrmnles alhruugh t poirtsawarded Her. Inoctttle (1055} Interest. Expense Incane Tue: 3. $137,000 $61,650 $34,250 b. 131,600 52, 640 47,376 6. 140,100 9,807 67,246 d. 116,450 45, 416 46,909 El e. 89,050 22,263 33,839 f. [36,360] 76,720 0 £00k g Cormuteumeslmeresteamed. Prn Income before interest & _ taxes 0 .‘ Interest expense 9 — a 5 2329000 t 5 61.6500 : 373 times ti 5 2316160 t 5 52.6400 = 440 times 6 5 2111550 t 5 9,6070 = 2214 times d 5 2167759 t 5 45.4169 = 464 times e 5 1451520 .' 5 22.2630 = 652 times t 5 383600 t 5 76.7200 = 050 times Wthh COITDBH]! Indlcntes Ire stagest ablllly to pay Interest experse as It comes due? < EEC! 90f9 I Netti Chapterfl - Homework 0 swarmed 100mm Total pom awarded Help Exit Show correct an 9 .. Whrcn con-paw Indlcares the strongest abllrly to pay Innerest expense as It comes due? 11m Company a ”0"” am "a" Company D Cornpmy c 0 Company d Company e Company I Explanation (a) (b) (C) (d! (e) (f) Flume rat or 34 5a Er! Income before interest & taxes $232,900 $231,616 $217,155 $210,775 $145,152 $38,360 Denominator Incereec expense 5 61,650 5 52,640 5 9,30"; 5 45,416 $ 22,263 $76,720 Ratio 3.?8 4.40 22.14 4.64 6.52 0.50 Analysls: Company (c) has the 51mngest abllllyto payr Interest expense as Tt mines due as madame-d by the compan'fs tlmes Ink-rem earned (coverage) ratlo of 2214 tlmes. Enema llrlrs Declslon MBEIS < Brest 9 0f 9 I Next. ...
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