Unformatted text preview: Chapter 11 Current Liabilities and Payroll 527 Aug. 25. Reinstated the Jacobs account written off on August 8 and received $600 Sept. Oct. cash in full payment. 2. Purchased land by issuing a $300,000, 90—day note to Ace Development
Co, which discounted it at 10%. 2. Sold office equipment in exchange for $60,000 cash plus receipt of a
$40,000, 120-day, 6% note. The equipment had cost $140,000 and had accu-
mulated depreciation of $25,000 as of October 1. Nov. 30. Journalized the monthly payroll for November, based on the following data: Salaries Deductions
Safes salaries $60,400 Income tax withheld $17,082
Ottice salaries 34,500 Social security tax withheld 5.450
$94300 Medicare tax withheld 1,424 Unemployment tax rates: State unemployment 4.0% Federal unemployment 0.8%
Amount subject to unemployment taxes: State unemployment $4.000 Federal unemployment 4,000 30. Iournalized the employer's payroll taxes on the payroll. Dec. 1. Journaljzed the payment of the September 2 note at maturity.
30. The pension cost for the year was $85,000, of which $62,400 was paid to the
pension plan trustee.
Instructions 1. journalize the selected transactions.
2. Based on the following data, prepare a bank reconciliation for December of the
current year: twang.» Balance according to the bank statement at December 31, $126,400.
Balance according to the ledger at December 31, $109,650.
Checks outstanding at December 31, $30,600. . Deposit in transit, not recorded by bank, $13,200. Bank debit memo for service charges, $350.
A check for $530 in payment of an invoice was incorrectly recorded in the accounts as $230. 3. Based on the bank reconciliation prepared in (2), journalize the entry or entries to
be made by Blackwell Company. 4 Based on the following selected data,journalize the adjusting entries as of December
31 of the current year: a. CLO Estimated uncollectible accounts at December 31, $7,200, based on an aging of
accounts receivable. The balance of Allowance for Doubtful Accounts at December
31 was $750 (debit) The physical inventory on December 31 indicated an inventory shrinkage of
$1,480. ' Prepaid insurance expired during the year, $10,200. . Ofﬁce supplies used during the year, $1,760. Depreciation is computed as follows: Depreciation Residual Acquisition Useful Life Method
Asset Cost Value Date in Years Used
Buildings $400,000 $ 0 January 2 40 Straight-line
Oﬁice Equip. 110,000 10,000 July 1 4 Straight-line
Store Equip. 50,000 5,000 January 3 8 Double—decliningbalance
(at twice the straight—line rate) A patent costing $22,500 when acquired on January 2 has a remaining legal life
of 10 years and is expected to have value for ﬁve years. . The cost of mineral rights was $220,000. Of the estimated deposit of 400,000 tons of ore, 24,000 tons were mined and sold during the year. ...
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- Spring '10