Concept explainers
Journalizing and posting liabilities
The general ledger of U-R-Shipping at June 30, 2016, the end of the company's fiscal year, includes the following account balances before payroll and
Accounts Payable $ 115,000
Interest Payable 0
Salaries Payable 0
Employee Income Taxes Payable 0
FICA-OASDI Taxes Payable 0
FICA-Medicare Taxes Payable 0
Federal
State Unemployment Taxes Payable 0
Unearned Rent Revenue 6,300
Long-Term Notes Payable 300,000
The additional data needed to develop the payroll and adjusting entries at June 30 are as follows:
a. The long-term debt is payable in annual installments of $60,000, with the next installment due on July 31. On that date, U-R-Shipping will also pay one year's interest at 8%. Interest was paid on July 31 of the preceding year. Make the adjusting entry to accrue interest expense at year-end.
b. Gross unpaid salaries for the last payroll of the fiscal year were $4,100. Assume that employee income taxes withheld are $820 and that all earnings are subject to OASDI.
c. Record the associated employer taxes payable for the last payroll of the fiscal year, $4,100. Assume that the earnings are not subject to unemployment.
d. On February 1, the company collected one year's rent of $6,300 in advance.
Requirements
- Using T-accounts, open the listed accounts and insert the unadjusted June 30 balances.
- Journalize and post the June 30 payroll and adjusting entries to the accounts that you opened. Identify each adjusting entry by letter.
- Prepare the current liabilities section of the balance sheet at June 30, 2016.
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