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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. Employer’s 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).

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881
BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881

Solutions

Chapter
Section
Chapter 8, Problem 62E
Textbook Problem

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. Employer’s 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).

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Chapter 8 Solutions

Cornerstones of Financial Accounting
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