University:
Grand Rapids Community College
Course:
Financial and Managerial Accounting: Information for Decisions - John J. Wild
Academic year:

2024
Views:

237

Pages:

3
Author:

stud_ice13

Problem 9-1B: Short-term notes payable transactions 1. Maturity Date: o Determine the maturity date based on the term of each note. 2. Interest Due at Maturity: o Use Interest=Principal×Rate×(Time360) o For example, if Fox-Pro has a principal of $1,000, at 6% for 60 days: Interest=1,000×0.06×60360=115 3. Year-End Interest Adjustments: o Calculate accrued interest up to December 31 and prepare the adjusting entry. 4. Journal Entries: o Record entries for each note issuance, interest accrual, and note payment upon maturity. Problem 9-2B: Payroll transactions 1. FICA Social Security and Medicare Taxes: o Calculate based on total salaries of $57,000 (sales, office, and delivery employees).  FICA Social Security: 57,000×6.2%=3,534  FICA Medicare: 57,000×1.45%=826.50 2. Employee Payroll Entry: o Debit Salaries Expense and credit each withholding and Salaries Payable. 3. Employer Payroll Taxes: o State Unemployment Tax (SUTA) and Federal Unemployment Tax (FUTA) rates applied to the first $7,000 per employee. 4. Journal Entries: o Prepare entries for salaries, withholdings, and employer payroll taxes. Problem 9-3B: Payroll expenses, withholdings, and taxes 1. FICA Withholdings: o Social Security: Gross Pay×6.2% o Medicare: Gross Pay×1.45% 2. Employer’s FICA, FUTA, and SUTA: o Calculate and record FICA, FUTA, and SUTA based on each employee’s gross pay. 3. Net Pay Calculation: o Deduct FICA, Medicare, health insurance, and pension from gross pay. 4. Total Payroll-Related Expense: o Sum gross pay, employer-paid taxes, health insurance, and pension contributions. Problem 9-4B: Warranty expense and liability 1. Warranty Expense Calculation: o Warranty expense is 10% of sales. o For example, November sales of $2,500 results in warranty expense: Warranty Expense=2,500×10%=250 2. Warranty Replacements: o Reduce the Estimated Warranty Liability and Inventory for each replacement. 3. Balance of Warranty Liability: o Adjust for each period’s warranty costs and replacements. 4. Journal Entries: o Record sales, warranty expense, and replacements. Problem 9-5B: Times interest earned 1. Times Interest Earned Calculation: o Use Times Interest Earned=Net Income+Interest ExpenseInterest Expense 2. Impact of Sales Changes on Net Income: o Calculate the change in net income for sales adjustments. 3. Analysis: o Determine which company can better cover interest expense under fluctuating sales. Problem 9-6BA: Payroll transactions 1. Payroll Tax Payments and Expenses: o Record payments to Security Bank and the State Tax Commission. 2. June Payroll Journal Entry: o Debit Salaries Expense for gross pay, and credit the withholdings and Salaries Payable. 3. Employer Payroll Taxes: o Record FICA, FUTA, and SUTA expenses based on payroll. 4. Quarterly Payroll Filings: o Prepare entries for tax payments and Form 941 filings. These steps should cover each problem's requirements, including key calculations and journal entries. If you'd like specific journal entry formats or calculations for any section, let me know!