Financial Accounting Questions and Answers

The following accounts, with the balances indicated, appear in the ledger of Codigo Co. on December 1 of the current year: 111 Salaries Payable — 118 Bond Deductions Payable $ 2,520 112 Social Security Tax Payable $ 6,847 119 Medical Insurance Payable 2,800 113 Medicare Tax Payable 1,763 411 Sales Salaries Expense 778,000 114 Employees Federal Income Tax Payable 10,873 511 Offi cers Salaries Expense 375,000 115 Employees State Income Tax Payable 9,874 611 Offi ce Salaries Expense 140,000 116 State Unemployment Tax Payable 1,400 618 Payroll Tax Expense 104,610 117 Federal Unemployment Tax Payable 400 The following transactions relating to payroll, payroll deductions, and payroll taxes occurred during December: Dec. 1. Issued Check No. 615 to Canal Insurance Company for $2,800, in payment of the semiannual premium on the group medical insurance policy. 1. Issued Check No. 616 to Green Bank for $19,483, in payment for $6,847 of social security tax, $1,763 of Medicare tax, and $10,873 of e...

The following data for Gridiron Industries, Inc., relate to the payroll for the week ended December 7, 2012: Employee Hours Worked Hourly Rate Weekly Salary Federal Income Tax U.S. Savings Bonds Aikman 50 $26.00 $328.90 $45 Csonka $3,400 731.00 0 Dickerson 35 28.00 186.20 38 Elway 44 34.00 328.44 30 Harris 38 22.00 175.56 45 Motley 2,000 480.00 68 Nagurski 45 26.00 185.25 0 Sanders 45 27.00 282.15 45 Swann 42 25.00 215.00 0 Employees Csonka and Motley are office staff, and all of the other employees are sales personnel. All sales personnel are paid 1½ times the regular rate for all hours in excess of 40 hours per week. The social security tax rate is 6.0% of each employee’s annual earnings, and Medicare tax is 1.5% of each employee’s annual earnings. The next payroll check to be used is No. 328. Instructions 1. Prepare a payroll register for Gridiron Industries, Inc., for the week ended December 7, 2012. Use the following columns for the payroll register: Name, Total Hours, Regular Ear...

If the working papers correlating with this textbook are not used, omit Problem 11-4B. The payroll register for Ritchie Manufacturing Co. for the week ended September 14, 2012, is presented in the working papers. Instructions 1. Journalize the entry to record the payroll for the week. 2. Journalize the entry to record the issuance of the checks to employees. 3. Journalize the entry to record the employer’s payroll taxes for the week. Assume the following tax rates: state unemployment, 3.4%; federal unemployment, 0.8%. Of the earnings, $2,200 is subject to unemployment taxes. 4. Journalize the entry to record a check issued on September 17 to Second National Bank in payment of employees’ income taxes, $2,464.97, social security taxes, $1,753.92, and Medicare taxes, $438.50. Answer: 1. 2012  Sept. 14 Sales Salaries Expense ............................... 6,398.00  Office Salaries Expense .............................. 4,140.00  Delivery Salaries Expense........................

Diamond Industries, Inc., began business on January 2, 2011. Salaries were paid to employees on the last day of each month, and social security tax, Medicare tax, and federal income tax were withheld in the required amounts. An employee who is hired in the middle of the month receives half the monthly salary for that month. All required payroll tax reports were filed, and the correct amount of payroll taxes was remitted by the company for the calendar year. Early in 2012, before the Wage and Tax Statements (Form W-2) could be prepared for distribution to employees and for filing with the Social Security Administration, the employees’ earnings records were inadvertently destroyed. None of the employees resigned or were discharged during the year, and there were no changes in salary rates. The social security tax was withheld at the rate of 6.0% and Medicare tax at the rate of 1.5% on salary. Data on dates of employment, salary rates, and employees’ income taxes withheld, which are summa...

The following information about the payroll for the week ended December 30 was obtained from the records of Dart Co.: Salaries: Deductions: Sales salaries $546,000 Income tax withheld $172,480 Warehouse salaries 116,000 Social security tax withheld 52,800 Offi ce salaries 218,000 Medicare tax withheld 13,200 $880,000 U.S. savings bonds 26,400 Group insurance 39,600 $304,480 Tax rates assumed: Social security, 6% Medicare, 1.5% State unemployment (employer only), 4.0% Federal unemployment (employer only), 0.8% Instructions 1. Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the following entries: a. December 30, to record the payroll. b. December 30, to record the employer’s payroll taxes on the payroll to be paid on December 31. Of the total payroll for the last week of the year, $26,000 is subject to unemployment compensation taxes. 2. Assuming that the payroll for the last week of the year is to be paid on January 4 of the following fis...

The following accounts, with the balances indicated, appear in the ledger of Quinn Co. on December 1 of the current year: 311 Salaries Payable — 318 Bond Deductions Payable $ 4,200 312 Social Security Tax Payable $10,830 319 Medical Insurance Payable 33,000 313 Medicare Tax Payable 2,850 511 Operations Salaries Expense 1,150,000 314 Employees Federal Income Tax Payable 17,575 611 Offi cers Salaries Expense 750,000 315 Employees State Income Tax Payable 17,100 612 Offi ce Salaries Expense 190,000 316 State Unemployment Tax Payable 1,800 619 Payroll Tax Expense 163,680 317 Federal Unemployment Tax Payable 600 The following transactions relating to payroll, payroll deductions, and payroll taxes occurred during December: Dec. 2. Issued Check No. 210 for $4,200 to Ace Bank to purchase U.S. savings bonds for employees. 5. Issued Check No. 211 to Ace Bank for $31,255 in payment of $10,830 of social security tax, $2,850 of Medicare tax, and $17,575 of employees’ federal income tax due. 16. Jou...

The following items were selected from among the transactions completed by Javelin, Inc. during the current year: Mar. 1. Borrowed $80,000 from Nova Company, issuing a 30-day, 9% note for that amount. 15. Purchased equipment by issuing a $180,000, 180-day note to Shelby Manufacturing Co., which discounted the note at the rate of 7.5%. 31. Paid Nova Company the interest due on the note of March 1 and renewed the loan by issuing a new 60-day, 9% note for $80,000. (Record both the debit and credit to the notes payable account.) May 30. Paid Nova Company the amount due on the note of March 31. July 6. Purchased merchandise on account from Pacer Co., $56,000, terms, n/30. Aug. 5. Issued a 45-day, 8% note for $56,000 to Pacer Co., on account. Sept. 11. Paid Shelby Manufacturing Co. the amount due on the note of March 15. 19. Paid Pacer Co. the amount owed on the note of August 5. Nov. 16. Purchased store equipment from Gremlin Co. for $190,000, paying $40,000 and issuing a series of fi fteen...

If the working papers correlating with this textbook are not used, omit Problem 11-4A. The payroll register for Knapp Co. for the week ended September 14, 2012, is presented in the working papers. Instructions 1. Journalize the entry to record the payroll for the week. 2. Journalize the entry to record the issuance of the checks to employees. 3. Journalize the entry to record the employer’s payroll taxes for the week. Assume the following tax rates: state unemployment, 3.6%; federal unemployment, 0.8%. Of the earnings, $2,000 is subject to unemployment taxes. 4. Journalize the entry to record a check issued on September 17 to Fourth National Bank in payment of employees’ income taxes, $2,062.17, social security taxes, $1,463.88, and Medicare taxes, $365.98. Answer: 1. 2012  Sept. 14 Sales Salaries Expense ............................... 5,155.00  Office Salaries Expense .............................. 4,204.00  Delivery Salaries Expense........................... 2,840.00 ...

The following data for Throwback Industries, Inc. relate to the payroll for the week ended December 7, 2012: Employee Hours Worked Hourly Rate Weekly Salary Federal Income Tax U.S. Savings Bonds Blanda 48 $44.00 $526.24 $ 45 Dawson 42 38.00 351.31 50 Fouts 44 46.00 402.04 55 Griese 36 32.00 241.92 65 Namath 45 40.00 399.00 0 Marino $2,200 528.00 44 Staubach 35 29.00 152.25 110 Starr 2,450 539.00 102 Unitas 41 38.00 315.40 0 Employees Marino and Starr are office staff, and all of the other employees are sales personnel. All sales personnel are paid 1½ times the regular rate for all hours in excess of 40 hours per week. The social security tax rate is 6.0%, and Medicare tax is 1.5% of each employee’s annual earnings. The next payroll check to be used is No. 625. Instructions 1. Prepare a payroll register for Throwback Industries, Inc. for the week ended December 7, 2012. Use the following columns for the payroll register: Name, Total Hours, Regular Earnings, Overtime Earnings, Total Earn...

Courtside Concepts Co. began business on January 2, 2011. Salaries were paid to employees on the last day of each month, and social security tax, Medicare tax, and federal income tax were withheld in the required amounts. An employee who is hired in the middle of the month receives half the monthly salary for that month. All required payroll tax reports were filed, and the correct amount of payroll taxes was remitted by the company for the calendar year. Early in 2012, before the Wage and Tax Statements (Form W-2) could be prepared for distribution to employees and for filing with the Social Security Administration, the employees’ earnings records were inadvertently destroyed. None of the employees resigned or were discharged during the year, and there were no changes in salary rates. The social security tax was withheld at the rate of 6.0% and Medicare tax at the rate of 1.5% on salary. Data on dates of employment, salary rates, and employees’ income taxes withheld, which are summariz...

The following information about the payroll for the week ended December 30 was obtained from the records of Arnsparger Equipment Co.: Salaries: Deductions: Sales salaries $270,000 Income tax withheld $ 95,920 Warehouse salaries 142,000 Social security tax withheld 32,700 Offi ce salaries 133,000 Medicare tax withheld 8,175 $545,000 U.S. savings bonds 11,990 Group insurance 9,810 $158,595 Tax rates assumed: Social security, 6% Medicare, 1.5% State unemployment (employer only), 4.5% Federal unemployment (employer only), 0.8% Instructions 1. Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the following entries: a. December 30, to record the payroll. b. December 30, to record the employer’s payroll taxes on the payroll to be paid on December 31. Of the total payroll for the last week of the year, $30,000 is subject to unemployment compensation taxes. 2. Assuming that the payroll for the last week of the year is to be paid on January 5 of the...

The following items were selected from among the transactions completed by Isis Co. during the current year: Feb 15. Purchased merchandise on account from Viper Co., $260,000, terms n/30. Mar. 17. Issued a 45-day, 5% note for $260,000 to Viper Co., on account. May 1. Paid Viper Co. the amount owed on the note of March 17. June 15. Borrowed $300,000 from Ima Bank, issuing a 60-day, 9% note. July 21. Purchased tools by issuing a $240,000, 60-day note to Charger Co., which discounted the note at the rate of 7%. Aug. 14. Paid Ima Bank the interest due on the note of June 15 and renewed the loan by issuing a new 30-day, 10% note for $300,000. (Journalize both the debit and credit to the notes payable account.) Sept. 13. Paid Ima Bank the amount due on the note of August14. 19. Paid Charger Co. the amount due on the note of July 21. Dec. 1. Purchased offi ce equipment from Challenger Co. for $235,000, paying $35,000 and issuing a series of ten 7.5% notes for $20,000 each, coming due at 30-da...

La Casa Interiors deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours. The data required to reconcile the bank statement as of July 31 have been taken from various documents and records and are reproduced as follows. The sources of the data are printed in capital letters. All checks were written for payments on account. BANK RECONCILIATION FOR PRECEDING MONTH (DATED JUNE 30): Cash balance according to bank statement . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,422.80 Add deposit of June 30, not recorded by bank . . . . . . . . . . . . . . . . . . . . . . . 780.80 $10,203.60 Deduct outstanding checks: No. 580 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $310.10 No. 602 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85.50 No. 612 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

The cash account for Ambulance Systems at February 29, 2012, indicated a balance of $20,580. The bank statement indicated a balance of $24,750 on February 29, 2012. Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following reconciling items: a. Checks outstanding totaled $9,300. b. A deposit of $12,000, representing receipts of February 29, had been made too late to appear on the bank statement. c. The bank had collected $6,240 on a note left for collection. The face of the note was $6,000. d. A check for $140 returned with the statement had been incorrectly recorded by Ambulance Systems as $410. The check was for the payment of an obligation to Holland Co. for the purchase of office supplies on account. e. A check drawn for $725 had been incorrectly charged by the bank as $275. f. Bank service charges for February amounted to $90. Instructions 1. Prepare a bank reconciliation. 2. Journalize the necessary entries. The accounts ha...