Plymouth Electronics had the following transactions that produced liabilities during 2020: a. Purchased merchandise on credit for $80,000. (Note: Assume a periodic inventory system.) b. Year-end wages of $40,000 were incurred, but not paid. Related federal income taxes of $13,000 and Medicare taxes of $580 were withheld. Employee wages are all above the Social Security maximum, so only Medicare was paid. c. Year-end estimated income taxes payable, but unpaid, for the year were $113,615. d. Sold merchandise on account for $3,636, including state sales taxes of $180. (Note: Assume a periodic inventory system.) e. Employer's share of Medicare taxes for the period was $580. The taxes will be paid at a later date. 1. Borrowed cash under a 180-day, 8%, $155,000 note. Required: Prepare the entry to record each of these transactions (treat each transaction independently).

Plymouth Electronics had the following transactions that produced liabilities during 2020: a. Purchased merchandise on credit for $80,000. (Note: Assume a periodic inventory system.) b. Year-end wages of $40,000 were incurred, but not paid. Related federal income taxes of $13,000 and Medicare taxes of $580 were withheld. Employee wages are all above the Social Security maximum, so only Medicare was paid. c. Year-end estimated income taxes payable, but unpaid, for the year were $113,615. d. Sold merchandise on account for $3,636, including state sales taxes of $180. (Note: Assume a periodic inventory system.) e. Employer's share of Medicare taxes for the period was $580. The taxes will be paid at a later date. 1. Borrowed cash under a 180-day, 8%, $155,000 note. Required: Prepare the entry to record each of these transactions (treat each transaction independently).

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 62E: Recording Various Liabilities Plymouth Electronics had the following transactions that produced...

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Recording Various Liabilities Plymouth Electronics had the following transactions that produced liabilities during 2020: a. Purchased merchandise on credit for $80,000. ( Note: Assume a periodic inventory system.) Year-end wages of $40,000 were incurred, but not paid. Related federal income taxes of $13,000 and Medicare taxes of $580 were withheld. Employee wages are all above the Social Security maximum, so only Medicare was paid. b. Year-end estimated income taxes payable, but unpaid, for the year were $113,615. c. Sold merchandise on account for $3,636, including state sales taxes of $180. ( Note: Assume a periodic inventory system.) d. Employers share of Medicare taxes for the period was $580. The taxes will be paid at a later date. e. Borrowed cash under a 180-day, 8%, $155,000 note. Required: Prepare the entry to record each of these transactions (treat each transaction independently).
Recording Various Liabilities Glenview Hardware had the following transactions that produced liabilities during 2020: a. Purchased merchandise on credit for $30,000. ( Note: Assume a periodic inventory system.) b. Year-end wages of $10,000 were incurred, but not paid. Related federal income taxes of $1,200, Social Security of $620 (employee portion), and Medicare taxes of $145 were with-held from employees. c. Year-end estimated income taxes payable, but unpaid, for the year were $42,850. d. Sold merchandise on account for $1,262, including state sales taxes of S48. ( Note: Assume a periodic inventory system.) e. Employers share of Social Security and Medicare taxes for the period were $620 and $145, respectively. f. Borrowed cash under a 90-day, 9%, $25,000 note. Required: Prepare the entry to record each of these transactions (treat each transaction independently).
Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and taxable income for 2020. The prior period adjustment was the result of an error in calculating bad debt expense for 2019. The current tax rate is 30%, and no change in the tax rate has been enacted for future years. When the company applies intraperiod income tax allocation, the prior period adjustment will be shown on the: a. income statement at 12,000 b. income statement at 8,400 (net of 3,600 income taxes) c. retained earnings statement at 12,000 d. retained earnings statement at 8,400 (net of 3,600 income taxes)
Marmol Corporation uses the allowance method for bad debts. During 2019, Marmol charged 50,000 to bad debt expense and wrote off 45,200 of uncollectible accounts receivable. These transactions resulted in a decrease in working capital of: a. 0 b. 4,800 c. 45,200 d. 50,000
Heller Company began operations in 2019 and used the LIFO method to compute its 300,000 cost of goods sold for that year. At the beginning of 2020, Heller changed to the FIFO method. Heller determined that its cost of goods sold under FIFO would have been 250,000 in 2019. For 2020, Hellers cost of goods sold under FIFO was 360,000, while it would have been 410,000 under LIFO. Heller is subject to a 21% income tax rate. Compute the cumulative effect of the retrospective adjustment on prior years income (net of taxes) that Heller would report on its retained earnings statement for 2020.
Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January 1, 2019. In addition, Spath agrees to sell inventory to the customer at reduced prices over a 5-year period. Spaths incremental borrowing rate is 12%. The customer agrees to purchase an equal amount of inventory each year over the 5-year period so that a straight-line method of revenue recognition is appropriate. Required: Prepare the journal entries on Spaths books for 2019 and 2020. (Round answers to 2 decimal places.)
At the end of 2019, Manny Company recorded its ending inventory at 350,000 based on a physical count. During 2020, the company discovered that the correct inventory value at the end of 2019 should have been 400,000 because it made a counting error. Upon discovery of this error in 2020, what correcting journal entry will Manny make? Ignore income taxes.
On January 1, 2019, Northfield Corporation becomes delinquent on a 100,000, 14% note to First National Bank, on which 16,651 of interest has accrued. On January 2, 2019, the bank agrees to restructure the note. It forgives the accrued interest, extends the repayment date to December 31, 2021, and reduces the interest rate to 10%. Required: Prepare a schedule for Northfield to compute the annual interest expense in regard to the preceding note for each year of the restructuring agreement.
The balance in Ashwood Companys accounts payable account at December 31, 2019, was 1,200,000 before any necessary year-end adjustment relating to the following: Goods were in transit from a vendor to Ashwood on December 31, 2019. The invoice cost was 85,000, and the goods were shipped FOB shipping point on December 29, 2019. The goods were received on January 2, 2020. Goods shipped FOB shipping point on December 20, 2019, from a vendor to Ashwood were lost in transit. The invoice cost was 40,000. On January 5, 2020, Ashwood filed a 40,000 claim against the common carrier. Goods shipped FOB destination on December 22, 2019, from a vendor to Ashwood were received on January 6, 2020. The invoice cost was 20,000, What amount should Ashwood report as accounts payable on its December 31,2019, balance sheet? a. 1,260,000 b. 1,285,000 c. 1,325,000 d. 1,345,000