IDENTIFY THE THREE TYPES OF EMPLOYER PAYROLL TAXES

Question 1
Identify the three types of employer payroll taxes.
How are tax liability accounts and payroll tax expense accounts classified in the financial
statements? Question 2
Peralta Company borrows $45,600 on July 1 from the bank by signing a $45,600, 10%, one-year note
payable.
(a) Prepare the journal entry to record the proceeds of the note.
(b) Prepare the journal entry to record accrued interest at December 31, assuming adjusting entries
are made only at the end of the year.
(Credit account titles are automatically indented when amount is entered. Do not indent
manually. Record journal entries in the order presented in the problem.)
No
.
(a) (b) Date Account Titles and
Explanation Debit Credit J uly 1 Dec. 31 Question 3
Coghlan Auto Supply does not segregate sales and sales taxes at the time of sale. The register total for
March 16 is $34,100. All sales are subject to a 10% sales tax.
Compute sales taxes payable.
$
Sales taxes payable Make the entry to record sales taxes payable and sales revenue. (Credit account titles are
automatically indented when amount is entered. Do not indent manually.)
Date
Mar. 16 Account Titles and
Explanation Debit Credit Question 4
Beth Corbin’s regular hourly wage rate is $18, and she receives an hourly rate of $27 for work in
excess of 40 hours. During a January pay period, Beth works 50 hours. Beth’s federal income tax
withholding is $94, she has no voluntary deductions, and the FICA tax rate is 7.65%. Use January 15 for
the end of the pay period and the payment date.
Prepare the journal entries to record (a) Beth’s pay for the period and (b) the payment of Beth’s wages.
(Round your answers to 2 decimal places, e.g. 15.25. Credit account titles are
automatically indented when amount is entered. Do not indent manually.)
No. Date (a) Jan. 15 Account Titles and
Explanation Debit Credit (b) Jan. 15 Question 5
On June 1, Merando Company borrows $90,000 from First Bank on a 6-month, $90,000, 8% note.
Prepare the entry on June 1. (Credit account titles are automatically indented when amount is
entered. Do not indent manually.)
Date
June 1 Account Titles and
Explanation Debit Credit Prepare the adjusting entry on June 30. (Credit account titles are automatically indented when
amount is entered. Do not indent manually.)
Account Titles and
Explanation Date Debit Credit June 30 Prepare the entry at maturity (December 1), assuming monthly adjusting entries have been made
through November 30. (Credit account titles are automatically indented when amount is
entered. Do not indent manually.)
Date Account Titles and
Explanation Debit Credit Dec. 1 What was the total financing cost (interest expense)?
$
Total financing cost Question 6
Betancourt Company sells automatic can openers under a 75-day warranty for defective merchandise.
Based on past experience, Betancourt estimates that 4% of the units sold will become defective during
the warranty period. Management estimates that the average cost of replacing or repairing a defective
unit is $15. The units sold and units defective that occurred during the last 2 months of 2017 are as
follows.
Month Units Sold Units Defective Prior to December 31 November
December 30,900
32,900 618
411 Prepare the journal entries to record the estimated liability for warranties and the costs incurred in
honoring 1,029 warranty claims. (Assume actual costs of $15,435.) (Credit account titles are
automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation Debit Credit (To accrue estimated warranty costs.) (To record honoring of warranty
contracts.) Determine the estimated warranty liability at December 31 for the units sold in November and
December.
$
Estimated warranty liability Give the entry to record the honoring of 500 warranty contracts in January at an average cost of $15.
(Credit account titles are automatically indented when amount is entered. Do not indent
manually.)
Account Titles and
Explanation Debit Credit Question 7
Suppose the following financial data were reported by 3M Company for 2016 and 2017 (dollars in
millions).
3M Company
Balance Sheets (partial)
2017
Current assets 2016 Cash and cash equivalents
Accounts receivable, net
Inventories
Other current assets
Total current assets
Current liabilities $3,000
3,590
2,756
1,878 $1,917
3,140
3,013
1,556 $11,224
$4,775 $9,626
$5,866 Calculate the current ratio and working capital for 3M for 2016 and 2017. (Round current ratio to 2
decimal places, e.g. 1.25 : 1. Enter working capital answers to million.)
Current ratio
2016 :1 2017 :1 Working
capital
$
2016 million
$ 2017 million Suppose that at the end of 2017, 3M management used $191 million cash to pay off $191 million of
accounts payable. How would its current ratio and working capital have changed? (Round current
ratio to 2 decimal places, e.g. 1.25 : 1. Enter working capital answer to million.) Current ratio :1
$ Working capital million Question 8
On January 1, 2017, the ledger of Accardo Company contains the following liability accounts.
Accounts Payable
Sales Taxes Payable
Unearned Service Revenue $57,000
7,200
16,000 During January, the following selected transactions occurred.
Jan. 5 Sold merchandise for cash totaling $21,504, which includes 12% sales taxes.
12 Performed services for customers who had made advance payments of $11,500. (Credit
Service Revenue.) 14 Paid state revenue department for sales taxes collected in December 2016 ($7,200).
20 Sold 900 units of a new product on credit at $50 per unit, plus 12% sales tax. This new
product is subject to a 1-year warranty.
21 Borrowed $22,500 from Girard Bank on a 3-month, 12%, $22,500 note.
25 Sold merchandise for cash totaling $12,544, which includes 12% sales taxes. Journalize the January transactions. (Credit account titles are automatically indented when
amount is entered. Do not indent manually. Record journal entries in the order presented
in the problem.)
Date J an. 5 J an. 12 J an. 14 J an. 20 J an. 21 J an. 25 Account Titles and
Explanation Debit Credit Journalize the adjusting entries at January 31 for (1) the outstanding notes payable, and (2) estimated
warranty liability, assuming warranty costs are expected to equal 7% of sales of the new product.
(Hint: Use one-third of a month for the Girard Bank note.) (Credit account titles are automatically
indented when amount is entered. Do not indent manually. Record journal entries in the
order presented in the problem.)
No
. Date Account Titles and
Explanation Debit Credit 1. 2. Prepare the current liabilities section of the balance sheet at January 31, 2017. Assume no change in
accounts payable.
Accardo Company
Balance Sheet (Partial)
J anuary 31, 2017 Current Liabilities $ $
Total Current Liabilities Question 9
The following are selected transactions of Blanco Company. Blanco prepares financial statements
quarterly.

 

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