Chapter 11: 4TI (page 578)
: O’Conner guarantees its vacuums for four years. Prior experience indicates that warranty costs will be approximately 6% of sales. Assume that O’Conner made sales totaling $200,000 during 2018. Record the warranty expense for the year.
The warranty expenses payable will be credited with $12,000
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Question: Recording employee and employer payroll taxes County Company had the following partially completed payroll register:
| Earnings | Withholdings | ||||||||||
Beginning Cumulative Earnings | Current Period Earnings | Ending Cumulative Earnings | OASDI | Medicare | Income tax | Health Insurance | United way | Total Withholding | Net pay | Check No. | Salaries and Wages Expense |
\( 77,000 | \) 4,500 | \( 900 | \) 90 | \(15 | 801 | ||||||
112,000 | 7,200 | 1,200 | 144 | 35 | 802 | ||||||
48,000 | 3,300 | 600 | 66 | 0 | 803 | ||||||
61,000 | 3,300 | 850 | 66 | 20 | 804 | ||||||
0 | 4,500 | 1,100 | 90 | 0 | 805 | ||||||
\)298,000 | \(22,800 | \)4,650 | \(456 | \)70 | |||||||
Requirements
Curtis Company is facing a potential lawsuit. Curtis’s lawyers think that it is reasonably possible that it will lose the lawsuit. How should Curtis report this lawsuit?
Consider the following transactions of Sapphire Software: Mar. 31 Recorded cash sales of $230,000, plus sales tax of 7% collected for the state of New Jersey. Apr. 6 Sent March sales tax to the state. Journalize the transactions for the company. Ignore cost of goods sold.
Liam Wallace is general manager of Moonwalk Salons. During 2018, Wallace worked for the company all year at a \(13,400 monthly salary. He also earned a year-end bonus equal to 5% of his annual salary.
Wallace’s federal income tax withheld during 2018 was \)2,010 per month, plus \(1,608 on his bonus check. State income tax withheld came to \)110 per month, plus \(80 on the bonus. FICA tax was withheld on the annual earnings. Wallace authorized the following payroll deductions: Charity Fund contribution of 2% of total earnings and life insurance of \)15 per month.
Moonwalk incurred payroll tax expense on Wallace for FICA tax. The company also paid state unemployment tax and federal unemployment tax.
Requirements
1. Compute Wallace’s gross pay, payroll deductions, and net pay for the full year 2018. Round all amounts to the nearest dollar.
2. Compute Moonwalk’s total 2018 payroll tax expense for Wallace.
3. Make the journal entry to record Moonwalk’s expense for Wallace’s total earnings for the year, his payroll deductions, and net pay. Debit Salaries Expense and Bonus Expense as appropriate. Credit liability accounts for the payroll deductions and Cash for net pay. An explanation is not required.
4. Make the journal entry to record the accrual of Moonwalk’s payroll tax expense for Wallace’s total earnings.
5. Make the journal entry for the payment of the payroll withholdings and taxes.
Samuel Industries has three employees. Each employee earns two vacation days a month. Samuel pays each employee a weekly salary of $1,250 for a five-day workweek. Requirements
1. Determine the amount of vacation expense for one month.
2. Journalize the entry to accrue the vacation expense for the month.
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