Exercise 9-5 (20 minutes)
Subject
to Tax Rate Tax Explanation
a.
FICA––Social Security…… $ 800 6.20% $ 49.60 Full amount is subject to tax.
FICA—Medicare............. 800 1.45 11.60 Full amount is subject to tax.
SUTA….…….……….……... 600 2.90 17.40 $200 is over the maximum.
b.
FICA––Social Security…… $2,100 6.20% $130.20 Full amount is subject to tax.
FICA—Medicare............. 2,100 1.45 30.45 Full amount is subject to tax.
c.
FICA––Social Security…… $6,300 6.20% $390.60 $1,700 is over the maximum.
FICA—Medicare............. 8,000 1.45 116.00 Full amount is subject to tax.
Exercise 9-6 (10 minutes)
Sept. 30 Salaries Expense………………………………………..……. 800.00
FICA—Social Security Taxes Payable…….……. 49.60
FICA—Medicare Taxes Payable………….…….…. 11.60
To record payroll for pay period ended September 30.
Exercise 9-7 (10 minutes)
Sept. 30 Payroll Taxes Expense……………………………………… 82.20
FICA—Social Security Taxes Payable………….. 49.60
FICA—Medicare Taxes Payable…….……….……. 11.60
Exercise 9-8 (30 minutes)
1. July 31 Sales Salaries Expense……………..….……….………...200,000
Office Salaries Expense…………………..………………..160,000
FICA—Social Sec. Taxes Payable…………..….… 22,320
FICA—Medicare Taxes Payable..…….……….….. 5,220
Employee Fed. Inc. Taxes Payable…………....... 90,000
Employee State Inc. Taxes Payable………..….… 20,000
Employee Medical Insurance Payable*…......... 2,800
2. July 31 Salaries Payable…………………………………..….…….…
217,060
3. July 31 Payroll Taxes Expense…………………………….………..30,540
FICASocial Sec. Taxes Payable……............... 22,320
FICAMedicare Taxes Payable……………………. 5,220
July 31 Employee Benefits Expense…….……….…….……….. 6,600
Employee Medical Insurance Payable*…......... 4,200
4. July 31 FICASocial Security Taxes Payable……….……..…44,640
FICAMedicare Taxes Payable……………….………...10,440
Employee Fed. Income Taxes Payable………….…...90,000
Employee State Income Taxes Payable.................20,000
Employee Medical Insurance Payable…................ 7,000
Employee Life Insurance Payable….…….………...... 4,000
Exercise 9-9 (30 minutes)
a.
Employee
Cumulative
Pay
Pay Subject to
FICA Social
Security
Pay Subject
to FICA
Medicare
Pay Subject
to FUTA
Taxes
Pay Subject
to SUTA
Taxes
Ken S….…….........$ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 6,000
Tim V………………..60,200 60,200 60,200 7,000 7,000
Steve S................87,000 87,000 87,000 7,000 7,000
Ann T….…............146,500 117,000 146,500 7,000 7,000
Kathleen K………..106,900 106,900 106,900 7,000 7,000
Totals……….…......$684,000 $652,000 $684,000 $59,000 $59,000
b. FICA Social Security taxes
$80,848.00 = $652,000 x 6.2% x 2 (for employer and employee)
FUTA taxes
$ 354.00 = $59,000 x 0.6%
Exercise 9-10 (25 minutes)
1. Warranty Expense = 4% of dollar sales = 4% x $6,000 = $240
2. The December 31, 2015, balance of the liability equals the expense
3. The company should report no additional warranty expense in 2016 for
this copier.
4. The December 31, 2016, balance of the Estimated Warranty Liability
account equals the 2016 beginning balance minus the costs incurred in
2016 to repair the copier:
5. Journal entries
2015 (a)
Aug. 16 Cash…………..…………………….……………………………... 6,000
Sales……….……………………..……………..…….…….. 6,000
To record cash sale of copier.
Aug. 16 Cost of Goods Sold………..…………………………..……. 4,800
Merchandise Inventory……..…………….….…….… 4,800
To record cost of August 16 sale.
(b)
Exercise 9-11 (15 minutes)
1. B = 0.03 ($500,000 – B)
2.
2015
Dec. 31 Employee Bonus Expense……………..…….……... 14,563
3.
2016
Jan. 19 Bonus Payable…………………………..……….………. 14,563
Exercise 9-12 (10 minutes)
[Note: All entries dated December 31, 2015.]
1. Vacation Benefits Expense……………….….….……….…… 3,200
[20 employees x 1 day x $160].
2. Warranty Expense……………………………………..…….……. 18,000
Estimated Warranty Liability……………..…….….……. 18,000
Exercise 9-13 (10 minutes)
[Note: All entries dated December 31, 2015.]
1. No adjusting entry is required since it is not probable that the supplier will
2. No adjusting entry can be made since the loss cannot be reasonably
in the notes to the financial statements.
Exercise 9-14 (15 minutes)
(a) (b) (c) (d) (e) (f)
Numerator
Income before
interest & taxes.....$194,000 $176,000 $182,000 $379,000 $103,000 $ 5,000
Denominator
Exercise 9-15B (25 minutes)
1. Income Taxes Payable (target balance)…………………….……….………...$28,300
Adjustment (additional expense)…………..………………………………….….$ 3,610
2.
2015 (a)
Dec. 31 Income Tax Expense………….………………..…….…….. 3,610
2016 (b)
Jan. 20 Income Taxes Payable…………………………….…….…. 28,300
Cash…………………………………..…………………….… 28,300
Exercise 9-16A (15 minutes)
Regular pay (40 hours @ $14)…………..……….…….………... $560.00
Overtime premium pay (8 hours @ [$14 x 150%])........... 168 .00
Gross pay…………..………………………….……….……….……… 728.00
FICA—Social Security tax deduction (6.2%)………….….... $ 45.14
Exercise 9-17 (30 minutes)
(a)
Employe
e
Cumulative
Pay (Excludes
Current Period)
Current Period Gross Pay FIT
Withholding FUTA FICA S.S.
Employee
FICA
Medicare
Employee
Employee—
Benefits Plan
Withholding Employee
Net Pay
Pay
Type
Pay
Hours Gross Pay SIT
Withholding SUTA FICA S.S.
Employer
FICA
Medicare
Employer
Employer—
Benefits Plan
Expense
Kathleen 115,200.00 Salary — 7,000.00
2,000.00 0.00 111.60 101.50 350.00
4,136.90
300.00 0.00 111.60 101.50 700.00
Anthony 6,800.00 Salary — 500.00
80.00 1.20 31.00 7.25 25.00
336.75
20.00 10.80 31.00 7.25 50.00
Regular 80 800.00 110.00 0.00 57.04 13.34 46.00
740.00
Totals 148,500.00 10,020.00
2,380.00 8.64 298.84 145.29 501.00
6,306.87
388.00 77.76 298.84 145.29 1,002.00
Exercise 9-17 (concluded)
(b)
Aug 31 Salaries (or Wages) Expense……….…….…….……….10,020.00
FICA—Social Sec. Taxes Payable…………..….… 298.84
FICA—Medicare Taxes Payable..…….……….….. 145.29
Employee Fed. Inc. Taxes Payable…………....... 2,380.00
To record payroll for period.
(c)
Aug 31 Salaries (or Wages) Payable……………………………..
6,306.87
(d)
Aug 31 Payroll Taxes Expense………………………….…………..530.53
FICASocial Sec. Taxes Payable……............... 298.84
FICAMedicare Taxes Payable……………………. 145.29
Federal Unemployment Taxes Payable……...... 8.64
(e)
Aug 31 FICASocial Security Taxes Payable…….………..…
597.68
FICAMedicare Taxes Payable……………….………...290.58
Employee Fed. Income Taxes Payable………….…...
2,380.00
Employee State Income Taxes Payable.................
388.00
Employee Benefits Plan Payable………………….……1,503.00