1. On December 1, Buckbeak Company borrowed $20,000 from Pettigrew Company, giving a 60-day, 12%...


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:

ANotes Payable$20,000

BNotes Payable $20,000
Interest Payable$200
Interest Expense$200

CNotes Payable$20,000
Interest Expense$400

DNotes Payable$20,000
Interest Payable$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 withheld9,700

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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1) 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


Chapter 22 / Lesson 16

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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