Exercise 11-9 (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
b. FICA Social Security taxes
FICA Medicare taxes
FUTA taxes
SUTA taxes
Exercise 11-10 (25 minutes)
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
5. Journal entries
2015 (a)
Aug. 16 Cash………………………………………………………………. 6,000
Aug. 16 Cost of Goods Sold………………………………………… 4,800
(b)
Dec. 31 Warranty Expense…………………………………………… 240
2016 (c)
Nov. 22 Estimated Warranty Liability……………………………. 209
Exercise 11-11 (15 minutes)
1. B = 0.03 ($500,000 – B)
2.
2015
To record expected bonus costs.
3.
2016
To record payment of bonus.
Exercise 11-12 (10 minutes)
[Note: All entries dated December 31, 2015.]
Exercise 11-13 (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
Exercise 11-14 (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
Analysis: Company (d) has the strongest ability to pay interest expense as it
Exercise 11-15B (25 minutes)
1. Income Taxes Payable (target balance)……………………………………….$28,300
2.
2015 (a)
To adjust tax expense and liability.
2016 (b)
Exercise 11-16A (15 minutes)
Regular pay (40 hours @ $14)……………………………………………………………………………. $560.00
Exercise 11-17 (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
80.00 1.20 31.00 7.25 25.00
Exercise 11-17 (concluded)
(b)
Aug 31 Salaries (or Wages) Expense…………………………………………………………………10,020.00
FICA—Social Sec. Taxes Payable…………………………………………………… 298.84
FICA—Medicare Taxes Payable…………………………………………………….. 145.29
To record payroll for period.
(c)
To record payment of payroll.
(d)
Aug 31 Payroll Taxes Expense………………………………………………………………………….. 530.53
FICASocial Sec. Taxes Payable…………………………………………………….. 298.84
To record employer payroll taxes.
Aug 31 Employee Benefits Expense…………………………………………………………………..1,002.00
Employee Benefits Plan Payable…………………………………………………….. 1,002.00
To record costs of employee benefits.
(e)
Aug 31 FICASocial Security Taxes Payable…………………………………………………… 597.68
FICAMedicare Taxes Payable……………………………………………………………. 290.58
To record payment of FICA, income taxes,
SUTA, FUTA, and benefit plan contributions.
Exercise 11-18 (25 minutes)
(in SEK millions)
To record warranty expense and liability.
To record cost of warranty replacements.
3. Volvo would report warranty expense of SEK 7,706 million for 2013.
PROBLEM SET A
Problem 11-1A (45 minutes)
Locust Natl. Bank Fargo
1. Maturity dates
Date of the note………………………..May 19 July 8 Nov. 28
2. Interest due at maturity
Principal of the note………………….$35,000 $80,000 $42,000
3. Accrued interest on Fargo note at the end of 2014
Total interest for note…………………………………………… $ 560
4. Interest on Fargo note in 2015
Total interest for note…………………………………………… $ 560