Problem 11-1A (Concluded)
5.
2014
Apr. 20 Merchandise Inventory……………………………………. 40,250
Accounts Payable—Locust………………………… 40,250
Purchased merchandise on credit.
May 19 Accounts Payable—Locust……………………………… 40,250
July 8 Cash………………………………………………………………. 80,000
Aug. 17 Interest Expense…………………………………………….. 875
Paid note with interest.
Nov. 5 Interest Expense…………………………………………….. 2,400
Paid note with interest.
28 Cash………………………………………………………………. 42,000
Accrued interest on note payable.
2015
Jan. 27 Interest Expense…………………………………………….. 252
Paid note with interest.
Problem 11-2A (25 minutes)
Part 1
Jan. 8 Office Salaries Expense…………………………………………………………………………22,760.00
Sales Salaries Expense………………………………………………………………………….65,840.00
To record payroll for period.
Part 2
Jan. 8 Payroll Taxes Expense…………………………………………………………………………..10,853.50
FICA—Social Sec. Taxes Payable…………………………………………………… 5,493.20
To record employer payroll taxes.
Problem 11-3A (60 minutes)
1. Each employee’s FICA withholdings for Social Security
Dahlia Trey Kiesha Chee Total
Maximum base………….. $117,000 $117,000 $117,000 $117,000
Earned through 8/18…… 115,900 116,100 7,100 1,050
Yet under maximum…… $ 1,100 $ 900 $109,900 $115,950
2. Each employee’s FICA withholdings for Medicare (no limits)
Dahlia Trey Kiesha Chee Total
Earned this week……… $ 2,000 $ 900 $ 450 $ 400
3. Employer’s FICA taxes for Social Security
Dahlia Trey Kiesha Chee Total
4. Employer’s FICA taxes for Medicare
Dahlia Trey Kiesha Chee Total
Problem 11-3A (Concluded)
5. Employer’s FUTA taxes
Dahlia Trey Kiesha Chee Total
Maximum base…………….. $ 7,000 $ 7,000 $ 7,000 $ 7,000
6. Employer’s SUTA taxes
Dahlia Trey Kiesha Chee Total
Subject to tax (from 5)…. $ 0 $ 0 $ 0 $ 400
10.60
7. Each employee’s net (take-home) pay
Dahlia Trey Kiesha Chee Total
Gross earnings…………. $2,000.00 $ 900.00 $450.00 $400.00 $3,750.00
Less
FICA Social Sec. tax…… (68.20) (55.80) (27.90) (24.80) (176.70)
8. Employer’s total payroll-related expense for each employee
Dahlia Trey Kiesha Chee Total
Gross earnings…………… $2,000.00 $ 900.00 $450.00 $400.00 $3,750.00
Plus
FICA Social Sec. tax……. 68.20 55.80 27.90 24.80 176.70
Problem 11-4A (40 minutes)
1.
2014
Nov. 11 Cash………………………………………………………………. 7,875
Sales………………………………………………………… 7,875
Sold razors to customers.
To record razor warranty expense
and liability at 8% of selling price.
Dec. 9 Estimated Warranty Liability……………………………. 300
16 Cash………………………………………………………………. 16,500
Sales………………………………………………………… 16,500
Sold razors to customers.
16 Cost of Goods Sold………………………………………… 4,400
29 Estimated Warranty Liability……………………………. 600
31 Warranty Expense…………………………………………… 1,320
Problem 11-4A (Concluded)
2015
Jan. 5 Cash………………………………………………………………. 11,250
Sales………………………………………………………… 11,250
Sold razors to customers.
5 Cost of Goods Sold………………………………………… 3,000
Merchandise Inventory………………………………. 3,000
To record cost of January 5 sale (150 x $20).
2. Warranty expense for November 2014 and December 2014
Sales Percent Warranty Expense
November…………….. $ 7,875 8% $ 630
3. Warranty expense for January 2015
Sales in January…………………………$11,250
4. Balance of the estimated liability as of December 31, 2014
Warranty expense for November…………………………….. $ 630 credit
Problem 11-5A (60 minutes)
1. Miller Company
3. Sales increase by 30% (multiply prior sales by 1.3)
Miller Co. Weaver Co.
Sales…………………………………….. $1,300,000 $1,300,000
* Computed as the increase in net income divided by prior net income.
4. Sales increase by 50% (multiply prior sales by 1.5)
Miller Co. Weaver Co.
Sales…………………………………….. $1,500,000 $1,500,000
Variable expenses…………………. 1,200,000 900,000
5. Sales increase by 80% (multiply prior sales by 1.8)
Miller Co. Weaver Co.
Sales…………………………………….. $1,800,000 $1,800,000
Problem 11-5A (Continued)
6. Sales decrease by 10% (multiply prior sales by 0.9)
Miller Co. Weaver Co.
Sales………………………………… $900,000 $900,000
Variable expenses……………… 720,000 540,000
7. Sales decrease by 20% (multiply prior sales by 0.8)
Miller Co. Weaver Co.
Sales………………………………… $800,000 $800,000
Variable expenses……………… 640,000 480,000
8. Sales decrease by 40% (multiply prior sales by 0.6)
Miller Co. Weaver Co.
Sales………………………………… $600,000 $600,000
Variable expenses……………… 480,000 360,000
9. The higher fixed cost strategy (having more fixed interest expense) of
Weaver Co. accentuates the effects of increases and decreases in sales. That
The higher fixed cost strategy works fine if the sales level increases.
The lower fixed cost strategy protects the company if the sales level
Problem 11-6AA (50 minutes)
Mar. 15 FICASocial Security Taxes Payable…………………………………………………… 3,472
To record payment of FICA & federal income taxes.
31 Office Salaries Expense………………………………………………………………………… 11,200
Shop Salaries Expense…………………………………………………………………………. 16,800
To record payroll for the period.
To record payment of payroll.*
*Check numbers are likely entered in the Payroll Register.
31 Payroll Taxes Expense*…………………………………………………………………………. 2,786
FICASocial Sec. Taxes Payable…………………………………………………….. 1,736