HANDOUT PROBLEM for CURRENT LIABILITIES I. Prepare journal entries for the following transactions which took place in 2021. Sold various products for $180,000 on account. The products cost $85,000. Sales a. tax in your area is 8%. Your company uses a periodic inventory system. Your sales in part "a" included an offer for cash rebates of 2% of the $180,000 total sales price if the customer answers a short five-question internet survey. b. с. On November 1, 2021, your company collected $12,000 of rent on your extra office. The rent covers the six-month period from November 1, 2021 through April 30, 2022. Recorded $62,000 of wages earned by employees including $9,000 of d. withholding taxes, $4,000 of FICA taxes, and $2,800 of health insurance benefits. There were no other deductions from the employees' paychecks. e. Recorded EMPLOYER taxes on the wages in "a." Unemployment is a total of 3% of the gross earnings. f. On December 1, 2021, your company received notice that you were being sued for $90,000. g. December 31, 2021, adjusting entries: 1. Accrued wages of $763. Do not accrue additional payroll taxes. 2. Adjusted for the rent in part "c." Estimated that 10% of the customers in part "b." will answer the survey 3. and claim the cash rebate. 4. The lawsuit in "f" is still in progress and your lawyers have advised you that you will probably lose but the lawyers have reasonably estimated that they can settle the case for $50,000. Prepare a list of the current liabilities (account titles and amount still owed) from the above transactions which should be reported on the balance sheet on December 31, 2021.
HANDOUT PROBLEM for CURRENT LIABILITIES I. Prepare journal entries for the following transactions which took place in 2021. Sold various products for $180,000 on account. The products cost $85,000. Sales a. tax in your area is 8%. Your company uses a periodic inventory system. Your sales in part "a" included an offer for cash rebates of 2% of the $180,000 total sales price if the customer answers a short five-question internet survey. b. с. On November 1, 2021, your company collected $12,000 of rent on your extra office. The rent covers the six-month period from November 1, 2021 through April 30, 2022. Recorded $62,000 of wages earned by employees including $9,000 of d. withholding taxes, $4,000 of FICA taxes, and $2,800 of health insurance benefits. There were no other deductions from the employees' paychecks. e. Recorded EMPLOYER taxes on the wages in "a." Unemployment is a total of 3% of the gross earnings. f. On December 1, 2021, your company received notice that you were being sued for $90,000. g. December 31, 2021, adjusting entries: 1. Accrued wages of $763. Do not accrue additional payroll taxes. 2. Adjusted for the rent in part "c." Estimated that 10% of the customers in part "b." will answer the survey 3. and claim the cash rebate. 4. The lawsuit in "f" is still in progress and your lawyers have advised you that you will probably lose but the lawyers have reasonably estimated that they can settle the case for $50,000. Prepare a list of the current liabilities (account titles and amount still owed) from the above transactions which should be reported on the balance sheet on December 31, 2021.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter8: Current And Contingent Liabilities
Section: Chapter Questions
Problem 61E: Recording Various Liabilities Glenview Hardware had the following transactions that produced...
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Transcribed Image Text:HANDOUT PROBLEM for CURRENT LIABILITIES
I.
Prepare journal entries for the following transactions which took place in 2021.
Sold various products for $180,000 on account. The products cost $85,000. Sales
a.
tax in your area is 8%. Your company uses a periodic inventory system.
Your sales in part "a" included an offer for cash rebates of 2% of the $180,000
total sales price if the customer answers a short five-question internet survey.
b.
с.
On November 1, 2021, your company collected $12,000 of rent on your extra
office. The rent covers the six-month period from November 1, 2021 through
April 30, 2022.
Recorded $62,000 of wages earned by employees including $9,000 of
d.
withholding taxes, $4,000 of FICA taxes, and $2,800 of health insurance benefits.
There were no other deductions from the employees' paychecks.
e.
Recorded EMPLOYER taxes on the wages in "a." Unemployment is a total of
3% of the gross earnings.
f.
On December 1, 2021, your company received notice that you were being sued
for $90,000.
g.
December 31, 2021, adjusting entries:
1.
Accrued wages of $763. Do not accrue additional payroll taxes.
2.
Adjusted for the rent in part "c."
Estimated that 10% of the customers in part "b." will answer the survey
3.
and claim the cash rebate.
4.
The lawsuit in "f" is still in progress and your lawyers have advised you that
you will probably lose but the lawyers have reasonably estimated that they
can settle the case for $50,000.
Prepare a list of the current liabilities (account titles and amount still owed) from the
above transactions which should be reported on the balance sheet on December 31, 2021.
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