Recording Various Liabilities Glenview Hardware had the following ...

  1. Home
  2. Homework Library
  3. Business
  4. Accounting
  5. Recording Various Liabilities Glenview Hardware had the following ...

QuestionQuestion

Transcribed TextTranscribed Text

Recording Various Liabilities Glenview Hardware had the following transactions that produced liabilities during 2014: a. Purchased merchandise on credit for $30,000. (Note: Assume a periodic inventory system.) b. Year-end wages of $10,000 were incurred, but not paid. Related income taxes of $1,200, Social Security of $620 (employee portion), and Medicare taxes of $145 were withheld. c. Year-end estimated income taxes payable, but unpaid, for the year were $42,850. d. Sold merchandise on account for $1,262, including state sales taxes of $48. (Note: Assume a periodic inventory system.) e. Employer's share of Social Security and Medicare taxes for the period were $620 and $145, respectively. f. Borrowed cash under a 90-day, 9%, $25,000 note. Required: Prepare the entry to record each of these transactions (treat each transaction independently). If an amount box does not require an entry, leave it blank. a (Record purchase of inventory on account) b. b. (Record wages and liabilities) C (Record accrued income taxes) d (Record sale) e (Record employer payroll taxes) Question 1 Exercise 8-65 Accrued Liabilities Charger Inc. had the following items that require adjusting entries at the end of the year. a. Charger pays its employees $5,000 every Friday for a 5-day work week. This year December 31 falls on a Wednesday. b. Charger earned income of $800,000 for the year for tax purposes. Its effective tax rate is 35% These taxes must be paid by April 15 of next year. C. Charger borrowed $280,000 with a note payable dated August 1. This note specifies 6%. The interest and principal are due on March 31 of the following year. d. Charger's president earns a bonus equal to 10% of income in excess of $650,000. Income for the year was $800,000. This bonus is paid in May of the following year and any expense is charged to wages expense. Required: Prepare the adjusting journal entries to record these transactions at the end of the current year. Dec 31 (Record accrued wages) Dec 31 (Record accrued income taxes) Dec 31 Prepare the adjusting journal entries to record these transactions at the end of the current year. Dec 31 (Record accrued wages) Dec 31 (Record accrued income taxes) Dec 31 (Record accrued interest) Dec 31 (Record accrued wages) Question 2 Exercise 8-67 Sales Tax Far and Wide Broadband provides Internet connection services to customers living in remote areas. During February 2014, it billed a customer a total of $295,000 before taxes. Weston also must pay the following taxes on these charges: a. State of Kansas sales tax of 6% b. Federal excise tax of 0.2% c. State of Kansas use tax of 0.4% Required: Assuming Far and Wide collects these taxesfrom thecustomer,what journalentry wouldFarandWide make when the customer pays their bill? If an amount box does not require an entry, leave it blank. (Record sale) Question 3 Exercise 8-68 Payroll Accounting and Discussion of Labor Costs Blitzen Marketing Research paid its weekly and monthly payroll on January 31. The following information is available about the payroll: Item Amount Monthly salaries $237,480 Hourly wages 585,000 FICA: Social Security (both employee and employer) 6.20% Medicare (both employee and employer) 1.45% Withholding for income taxes $108,500 Federal unemployment taxes 1,200 State unemployment taxes 4,000 Blitzen will pay both the employer's taxes and the taxes withheld on April 15. Required: 1. Prepare the journal entries to record the payroll payment and the incurrence of the associated expenses and liabilities. If an amount box does not require an entry, leave it blank. If required, round your answers to the nearest penny. Jan. 31 Jan. 31 (Record salaries, wages, and liabilities) Jan 31 (Record employer payroll taxes) 2. What is the employees' gross pay? $ What amount does Blitzen pay in excess of gross pay as a result of taxes? (Note: Provide both an absolute dollar amount and as a percentage of gross pay, rounding to two decimal places.) $ This is % of gross pay. 3. How much is the employees' net pay as a percentage of total payroll related expenses? (Note: Round answer to two decimal places.) % 4. Conceptual Connection: If another employee can be hired for $60,000 per year, what would be the total cost of this employee to Blitzen? Do not round intermediate calculations and round your final answer to two decimal places. $ 5. eBook Exercise 8-69 Unearned Revenue Jennifer's Landscaping Services signed a $400-per-month contract on November 1, 2013, to provide plant watering services for Lola Inc.'s office buildings. Jennifer's received 4 months service fees in advance on signing the contract. Required: 1. Prepare Jennifer's journal entry to record the cash receipt for the first 4 months. Question 4 Exercise 8-69 Unearned Revenue Jennifer's Landscaping Services signed a $400-per-month contract on November 1, 2013, to provide plant watering services for Lola Inc.'s office buildings. Jennifer's received 4 months service fees in advance on signing the contract. Required: 1. Prepare Jennifer's journal entry to record the cash receipt for the first 4 months. Nov. 1 (Record receipt of payment for services not yet performed) 2. Prepare Jennifer's adjusting entry at December 31, 2013. 2. Prepare Jennifer's adjusting entry at December 31, 2013. Dec 31 (Record recognition of revenue) 3. Conceptual Connection: How would the advance payment [account(s) and amount(s)) be reported in Jennifer's December 31, 2013, balance sheet? Unearned sales revenue in the amount of $ would appear among Jennifer's How would the advance payment [account(s) and amount(s)] be reported in Lola's December 31, 2013, balance sheet? A prepaid asset in the amount of $ would appear among Lola's . 6. Question 5 Warranties Ed's Athletics sells bicycles and other sports and athletic equipment. Sales and expected warranty claims for the year are as follows: Expected Warranty Claims Item Unit Sales for Warranty Period Cost per Claim Mountain bikes 300 3 claims per 100 sold $30 Racing bikes 120 I claims per 20 sold 75 Snowboards 650 2 claim per 100 sold 20 Required: 1. Prepare the entry to record warranty expense for Ed's for the year. Dec. 31 (Record warranty expense) 2. Conceptual Connection: Why does Ed's have to record a liability for future warranty claims? Warranties are Therefore, companies must record and a corresponding if such contingent amounts Question 6 Problem 8-73A Payable Transactions Richmond Company engaged in the following transactions during 2013: a. Purchased $160,000 of supplies from ABC Supplies on February 16. Amount due in full on March 31. b. Paid for 25% of the purchased merchandise (Transaction a) on February 26. C. On March 31 negotiated a payment extension with ABC for the remainder of the balance from the February 16 purchase by signing a 1-year, 10% note. d. Borrowed $300,000 on a 10-month, 8% interest-bearing note on April 30. e. Purchased $78,000 of merchandise on June 4. Amount due in full on June 30. f. Paid for the purchased merchandise (Transaction e) on June 24. g. Received from Haywood Inc. on August 19, a $22,000 deposit against a total selling price of $220,000 for services to be performed for Haywood h. Paid quarterly installments of Social Security and Medicare and individual income tax withholdings, as shown below, on October 15. The Social Security and Medicare were previously recorded as expenses during the quarter and the amounts paid represent both the employee and employer shares (50% each): Social Security taxes $185,000 Medicare taxes 43,266 Income taxes withheld 319,000 i. On December 15, Richmond completed the services ordered by Haywood on August 19. Haywood's remaining balance of $198,000 is due on January 31. Required: 1. Prepare journal entries for these transactions. If an amount box does not require an entry, leave it blank. a. Feb. 16 a Feb. 16 (Record purchase of supplies on account) b. Feb. 26 (Record partial payment of supplier) c. Mar. 31 (Record issuance of note to cover unpaid portion of account payable) d. Apr. 30 (Record issuance of note) e. June 4 (Record purchase of inventory on account) f. June 24 f. June 24 (Record payment of supplier) g. Aug. 19 (Record receipt of deposit for services not yet performed) h Oct 15 (Record employer payroll taxes) i. Dec 15 (Record recognition of revenue) Problem 1 Problem 8-79A Warranties Lincoln Repairs and Detailing has recently opened its doors to provide quality auto repair services. To encourage business, Lincoln offers a 9-month warranty on all repairs. The following data are available for 2013: Transmissions repaired, 2013 1,980 Expected frequency of warranty claims 0.05 per repair Actual warranty claims, 2013 $26,200 Estimated warranty liability, 1/1/13 $28,000 Estimated cost of each warranty claim $ 220 Assume that warranty claims are paid in cash. Required: 1. Compute the warranty expense for 2013. $ 2. Prepare the entry to record the payment of the 2013 warranty claims. Assume that warranty claims are paid in cash. Required: 1. Compute the warranty expense for 2013. $ 2. Prepare the entry to record the payment of the 2013 warranty claims. (Record payment of claims) 3. Conceptual Connection: What is the December 31, 2013, balance in the estimated warranty liability account? $ Why has the balance in the warranty liability account changed from January 1, 2013? The balance has because more claims were than were through warranty expense. Problem 2

Solution PreviewSolution Preview

These solutions may offer step-by-step problem-solving explanations or good writing examples that include modern styles of formatting and construction of bibliographies out of text citations and references. Students may use these solutions for personal skill-building and practice. Unethical use is strictly forbidden.

    By purchasing this solution you'll be able to access the following files:
    Solution.xlsx.

    $35.00
    for this solution

    PayPal, G Pay, ApplePay, Amazon Pay, and all major credit cards accepted.

    Find A Tutor

    View available Accounting Tutors

    Get College Homework Help.

    Are you sure you don't want to upload any files?

    Fast tutor response requires as much info as possible.

    Decision:
    Upload a file
    Continue without uploading

    SUBMIT YOUR HOMEWORK
    We couldn't find that subject.
    Please select the best match from the list below.

    We'll send you an email right away. If it's not in your inbox, check your spam folder.

    • 1
    • 2
    • 3
    Live Chats