Essay on Acc 205

593 Words Jul 10th, 2015 3 Pages
Week Four Exercise Assignment
Liability

1. Payroll accounting. Assume that the following tax rates and payroll information pertain to Brookhaven Publishing: * Social Security taxes: 4% on the first $55,000 earned per employee * Medicare taxes: 1.5% on the first $130,000 earned per employee * Federal income taxes withheld from wages: $7,500 * State income taxes: 4% of gross earnings * Insurance withholdings: 1% of gross earnings * State unemployment taxes: 5.4% on the first $7,000 earned per employee * Federal unemployment taxes: 0.8% on the first $7,000 earned per employee

The company incurred a salary expense of $50,000 during February. All employees had earned less than $5,000 by month-end and no
…show more content…
(Assume 360 day year for interest) | 31-Dec: Repaired six XY-80s during the month at a total cost of $162 | | 31-Dec: Accrued three days of salaries at a total cost of $1,400. | | |

Instructions
a. Prepare journal entries to record the transactions.
b. Prepare adjusting entries on December 31 to record accrued interest for each of the notes payable.

3. Notes payable. Red Bank Enterprises was involved in the following transactions during the fiscal year ending October 31: 2-Aug: Borrowed $55,000 from the Bank of Kingsville by signing a 90-day, 12% note. | 20-Aug: Issued a $50,000 note to Harris Motors for the purchase of a $50,000 delivery truck. The note is due in 180 days and carries a 12% interest r ate. | 10-Sep: Purchased merchandise from Pans Enterprises in the amount of $15,000. Issued | a 30-day, 12% note in settlement of the balance owed. | 11-Sep: Issued a $60,000 note to Datatex Equipment in settlement of an overdue account | payable of the same amount. The note is due in 30 days and carries a 14% interest rate. | 10-Oct: The note to Pans Enterprises was paid in full. | 11-Oct: The note to Datatex Equipment was paid in full. | 30-Oct: Paid note to Bank of Kingsville. |

Instructions
a. Prepare journal entries to record the transactions.
b. Prepare adjusting entries on December 31 to record accrued interest. (Daily interest is calculated utilizing

Related Documents