1. On December 1, Buckbeak Company borrowed $20,000 from Pettigrew Company, giving a 60-day, 12%...
Question:
1. On December 1, Buckbeak Company borrowed $20,000 from Pettigrew Company, giving a 60-day, 12% note. If the correct adjusting entry is made on December 31, Buckbeak's entry at maturity is:
| A | Notes Payable | $20,000 |
|---|---|---|
| cash | $20,000 |
| B | Notes Payable | $20,000 |
|---|---|---|
| Interest Payable | $200 | |
| Interest Expense | $200 | |
| Cash | $20,400 |
| C | Notes Payable | $20,000 |
|---|---|---|
| Interest Expense | $400 | |
| Cash | $20,400 |
| D | Notes Payable | $20,000 |
|---|---|---|
| Interest Payable | $400 | |
| Cash | $20,400 |
2. Scott Company has 5 sales employees, each of whom earns $16,000 per month and is paid on the last working day of the month. Each employee's wages are subject to FICA social security taxes of 62% and Medicare taxes of 1.45% on all wages. Withholding for each employee also includes federal income tax of 16% and monthly medical insurance premiums of $440 for each employee
The entry to accrue the company's monthly sales salaries expense on January 31 will not include:
a) A credit to Accrued Payroll Payable of $21,120
b) A credit to FICA- Medicare Taxes Payable for $1,160
c) A credit to FICA-Social Security Taxes Payable for $4,960
d) A credit to Employee Medical Insurance Payable for $2,200
3. Sunshine Company has the following monthly payroll for June 2016:
| Total salaris | $108,000 |
| Salaries subject to FICA taxes(6.2%+1.45%) | $108,000 |
| Salaries subject to FUTA (0.8%) and state unemployment taxes (2.7%) | $28,000 |
| Income taxes withheld | 9,700 |
The total employer's payroll tax expense for this period is:
a) $10, 476
b) $ 1, 558
c) $18, 942
d) $ 9, 242
Notes Payable and Payroll Taxes:
Recording of adjusting month end entry for interest expense. Also the recording of the monthly payroll entries. Both sets of entries are fundamental parts of the month end close entries.
Answer and Explanation: 1
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View this answer1) D is the correct answer because it assumes that at Dec 31- $200 of interest expense is recorded and that on Jan 31 the remaining $200 of interest...
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Adjusting Entries: Definition, Types & Examples
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Chapter 22 / Lesson 16
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Learn the definition of adjusting entries in accounting, and find examples. Explore the various types of adjusting journal entries, and examine how to do them.
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