Week 4 Assignment Essay

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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 wages have been paid during the month. a. Prepare the necessary…show more content…
Current liabilities Account payable 217,600 Notepayable25,000 Warranty payable 378 Salary payable 1,400 Interest payable 263 Total current liabilities 246,641 2. Current liabilities: entries and disclosure. A review of selected financial activities of Visconti’s during 20XX disclosed the following: 1-Dec: Borrowed $10,000 from the First City Bank by signing a 3-month, 15% note payable. Interest and principal are due at maturity. 10-Dec: Established a warranty liability for the XY-80, a new product. Sales are expected to total 1,000 units during the month. Past experience with similar products indicates that 3% of the units will require repair, with warranty costs averaging $27 per unit (parts only). 22-Dec: Purchased $16,000 of merchandise on account from Oregon Company, terms 2/10, n/30. 26-Dec: Borrowed $5,000 from First City Bank; signed a 15% note payable due in 60 days. (Assume 360 day year for interest) 31-Dec: Repaired six XY-80s during the month at a

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