Chapter 11: Q1RQ (page 603)
What are the three main characteristics of liabilities?
Liability is amonetary burdenon an individual or a business entity that will be paid in the future.
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On July 5, Williams Company recorded sales of merchandise inventory on account, $55,000. The sales were subject to sales tax of 4%. On August 15, Williams Company paid the sales tax owed to the state from the July 5 transaction. Requirements 1. Journalize the transaction to record the sale on July 5. Ignore cost of goods sold. 2. Journalize the transaction to record the payment of sales tax to the state on August 15.
Runner guarantees its snowmobiles for three years. Company experience indicates that warranty costs will be approximately 5% of sales. Assume that the Trail Runner dealer in Colorado Springs made sales totaling
Requirements
Record the sales, warranty expense, and warranty payments for the company.
Ignore cost of goods sold.
Recording employer payroll taxes and employee benefits Ricardo’s Mexican Restaurant incurred salaries expense of
Requirements
Erin O’Neil Associates reported short-term notes payable and salaries payable as follows:
2018 | 2017 | |
Current Liabilities—partial: | ||
Short-term Notes Payable | \(16,900 | \) 16,000 |
Salaries Payable | 3,400 | 4,000 |
During 2018, O’Neil paid off both current liabilities that were left over from 2017, borrowed cash on short-term notes payable, and accrued salaries expense. Journalize all four of these transactions for O’Neil during 2018. Assume no interest on short-term notes payable of $16,000.
O’Conner guarantees its vacuums for four years. Prior experience indicates that warranty costs will be approximately 6%ofsales. Assume that O’Conner made sales totaling $200,000 during 2018. Record the warranty expense for the year.
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