BUS142G
Financial Accounting
In-class exercises
Ch. 11
S11-2
Requirement 1 Date Accounts and Explanation Debit Credit
July 5 Accounts Receivable 15,900
Sales Revenue 15,000
Sales Tax Payable ($15,000 × 0.06) 900
To record sales revenue on account and the
related sales tax.
Requirement 2
Date Accounts and Explanation Debit Credit
Aug. Sales Tax Payable 300
15
Cash 300
To record cash payment for sales tax
payable.
S11-4
Date Accounts and Explanation Debit Credit
Requirement 1 2015
Dec. 31 Merchandise Inventory 10,000
Notes Payable 10,000
Purchased merchandise inventory in exchange
for one year, 10% note.
Requirement 2 Date Accounts and Explanation Debit Credit
2016
Jun. 30 Interest Expense ($10,000 × 0.10 × 6/12) 500
Interest Payable 500
Accrued interest expense at year-end.
Date Accounts and Explanation Debit Credit
2016
Requirement 3 Dec. 31 Notes Payable 10,000
Interest Expense ($10,000 × 0.10 × 6/12) 500
Interest Payable 500
Cash 11,000
Paid note and interest at maturity.
S11-6
Requirement 1
Straight-time pay for 40 hours ($30 × 40 hours) $ 1,200
Overtime pay for 22 hours: 22 × $30 × 1.5 990
Gross Pay $ 2,190
Requirement 2
Gross pay $ 2,190.00
Withholding deductions:
Employee income tax (10%) $ 219.00
Employee OASDI tax (6.2%) 135.78
Employee Medicare tax (1.45%) 31.76
Total withholdings 386.54
Net (take-home) pay $ 1,804.46
S11-6
Requirement 3
Date Accounts and Explanation Debit Credit
Wages Expense 2,190.00
Employee Income Taxes Payable 219.00
FICA—OASDI Taxes Payable 135.78
FICA—Medicare Taxes Payable 31.76
Wages Payable 1,804.46
To record wages expense and payroll withholdings.
Wages Payable 1,804.46
Cash 1,804.46
To record payment of wages.
S11-7
Requirement 1 Gross pay $ 11,900.00
Withholding deductions:
Employee income tax (10% of $11,900) $
1,190.00
Employee OASDI tax (6.2%)* 613.80
Employee Medicare tax (1.45% of $11,900) 172.55
Employee health insurance 250.00
Employee contribution to United Way (1%) 119.00
Total withholdings 2,345.35
Net (take-home) pay $ 9,554.65
*Calculation of tax for OASDI
Employee earnings subject to tax $
117,000
Employee earnings prior to the current –
month 107,100
Current pay subject to tax $
9,900
Tax rate × 0.062
Tax to be withheld from paycheck $
613.80*
Requirement 2
Date Accounts and Explanation Debit Credit
Oct. 31 Salaries Expense 11,900.00
Employee Income Taxes Payable $ 1,190.00
FICA—OASDI Taxes Payable 613.80
FICA—Medicare Taxes Payable 172.55
Employee Health Insurance Payable 250.00
United Way Payable 119.00
Salaries Payable 9,554.65
To record salaries expense and payroll
withholdings.
Salaries Payable 9,554.65
Cash 9,554.65
To record payment of salaries.
S11-8
Date Accounts and Explanation Debit Credit
Payroll Tax Expense 1,638
FICA—OASDI Taxes Payable 744
(6.2% × $12,000)
FICA—Medicare Taxes Payable 174
(1.45% × $12,000)
Federal Unemployment Taxes Payable 72
(0.6% × $12,000)
State Unemployment Taxes Payable 648
(5.4% × $12,000)
To record employer's payroll tax expense.
FICA—OASDI Taxes Payable 744
FICA—Medicare Taxes Payable 174
Federal Unemployment Taxes Payable 72
State Unemployment Taxes Payable 648
Cash 1,638
Payment of payroll taxes
E11-22
Date Accounts and Explanation Debit Credit
2016
Nov. 1 Warranty Expense (5% × $16,000) 800.00
Estimated Warranty Payable 800.00
Nov. 20 Estimated Warranty Payable 500.00
Cash 500.00
Dec. 31 Vacation Benefits Expense 6,000.00
Vacation Benefits Payable 6,000.00
Dec. 31 Employee Bonus Expense (5% × 62,000) / 1.05 2,952.38
Employee Bonus Payable 2,952.38
E11-23
Situation Appropriate accounting treatment
a. Do not disclose.
b. Describe the situation in a note to the financial statements.
c. Record an expense and a liability based on estimated amounts.
