Current liability

Current liability

1. A

Deductions	Percentage	Principle
Social Security	0.06	55000	3300
Medicare Taxes	0.015	130000	1950
Federal Income Taxes		7500	7500
State Income Taxes	0.05	Gross Earning	50000
Insurance Withholdings	0.01	Gross Earning	50000
State Unemployment Taxes	0.054	7000	378
Federal Unemployment Tax	0.008	7000	56

 

1. B

	Debit		Credit
Salary Expense	50000	Social Security	3000
		Medicare Taxes Payable	750
		Federal Income Taxes	7500
		State Income Taxes	2500
		Insurance With Holdings	500
		Salary Payable	35750
Totals	50000		50000

 

 

 

2. Journal Account

Date	Title of account	Debit	Credit
	10-Feb
1-Dec	Cash	20000
	Note payable		20000
10-Dec	Warranty expense	540
	Warranty payable		540
22-Dec	Purchases/Inventory	16000
	Account payable		16000
26-Dec	Cash	5000
	Note payable		5000
31-Dec	Warranty payable	162
	Cash		162
31-Dec	Salary expense	1400
	Salary payable		1400
31-Dec	Interest expense	263
	Interest payable		263

 

2. B.

Current liabilities
Account payable	219600
Note payable	25000
Warranty payable	378
Salary payable	1400
Interest payable	263
Total current liabilities	246641

 

 

 

3. A Journal Entries

Date	Title Of Account	Debit	Credit
	10-Feb
2-Aug	Cash	75000
	Bank		75000
20-Aug	Harris	40000
	Cash		40000
10-Sep	Inventory	15000
	Cash		15000
11-Sep	Account Payable	60000
	Cash		60000
10-Oct	Inventory		16800
	Cash	16800
30-Nov	Bank	840000
	Cash		840000

 

3. B 360 Days Method

	Interest		Interest/ per day
Kingsville Bank	84000-75000	9000/120	75
Pan’s inventory	16800-15000	1800/30	60

 

3. C

Current liabilities
Account payable	203600
Note payable	15000
Salary payable	40000
Interest payable	10800
Total current liabilities	269400

 

 

Reference

Lucas, W. (2012): Principles-Based Reasoning about Accounting Estimates Principles-Based Reasoning about Accounting Estimate:  Accounting Perspectives, 11(4), 259-296.

Summary & Highlights (2006): GAAP Update Service, 6(10), 1