Ch10 - Chapter 10 Reporting and Interpreting Current...

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Chapter 10 Reporting and Interpreting Current Liabilities EXERCISES E10–4 Req. 1 March 31, 2007: Compensation expense (+E - SE). ........................................ 224,000 Liability for income taxes withheld (+L). ............................... 46,000 Liability for union dues withheld (+L). ................................... 3,000 Liability for insurance premiums withheld(+L). ..................... 1,000 CPP payable (+L). ................................................................ 16,445 EI payable (+L) . ................................................................... 9,611 Cash ( - A). ............................................................................. 147,944 Payroll for March including employee deductions. Req. 2 March 31, 2007: Compensation expense (+E - SE). ........................................ 29,900 CPP payable (+L). ................................................................ 16,445 EI payable (+L). .................................................................... 13,455 Employer’s additional payroll expenses for March ($9,611 x 1.4 = $13,455). Req. 3 Liability for income taxes withheld ( - L). .................................... 46,000 Liability for union dues withheld ( - L). ....................................... 3,000 Liability for insurance premiums withheld ( - L). ......................... 1,000 CPP payable ( - L) ($16,445 x 2). .............................................. 32,890 EI payable ( - L) ($9,611 + $13,455). ......................................... 23,066 Cash ( - A). ............................................................................. 105,956 Remittance of employee deductions and employer-related amounts for March. Req. 4 The total compensation expense was $253,900, comprised of $224,000 of salaries and wages plus $29,900 of additional payroll charges levied on the employer.
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The total payroll (salaries and wages) was $224,000. The take-home pay was $147,944 and the percent of payroll that was take-home pay was 66% = $147,944 ÷ $224,000. Employee compensation is a large cost for most organizations. Employers are not concerned about the distinction between salaries and fringe benefits because both are expenses that are deductible for tax purposes. Employees sometimes prefer an extra dollar in fringe benefits over an extra dollar of salary because some fringe benefits are either not taxable or are not taxable in the current period. In the absence of tax effects, most employees prefer increases in salaries because they have full control over those dollars. E10–6 Req. 1 November 1, 2007: Cash (+A). ....................................................................... 4,500,000 Note payable (+L). ....................................................... 4,500,000 Borrowed on 6-month, 10%, note payable. Req. 2
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This note was uploaded on 12/09/2009 for the course ACCO comm 217 taught by Professor Mroz during the Fall '09 term at Concordia Canada.

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Ch10 - Chapter 10 Reporting and Interpreting Current...

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