Type
Solution Manual
Book Title
Financial Accounting Fundamentals 5th Edition
ISBN 13
978-0078025754

978-0078025754 Chapter 9 Solution Manual Part 3

March 26, 2020
Problem 9-2B (25 minutes)
Part 1
Jan. 8
Sales Salaries Expense ...........................................
34,745.00
Office Salaries Expense ..........................................
21,225.00
Delivery Salaries Expense................................
1,030.00
Part 2
Jan. 8
Payroll Taxes Expense ............................................
6,640.50
FICASocial Security Taxes Payable .............
3,534.00
Problem 9-3B (60 minutes)
1. Each employee’s FICA withholdings for Social Security
Ahmed
Carlos
June
Marie
Total
Maximum base ...............
$117,000
$117,000
$117,000
$117,000
2. Each employee’s FICA withholdings for Medicare (no limits)
Ahmed
Carlos
June
Marie
Total
3. Employer’s FICA taxes for Social Security
Ahmed
Carlos
June
Marie
Total
4. Employer’s FICA taxes for Medicare
Ahmed
Carlos
June
Marie
Total
Problem 9-3B (Concluded)
5. Employer’s FUTA taxes
Ahmed
Carlos
June
Marie
Total
Maximum base ............
$ 7,000
$ 7,000
$ 7,000
$ 7,000
6. Employer’s SUTA taxes
Ahmed
Carlos
June
Marie
Total
7. Each employee’s net (take-home pay)
Ahmed
Carlos
June
Marie
Total
Gross earnings.............
$2,500.00
$1,515.00
$475.00
$1,000.00
$5,490.00
8. Employer’s total payroll-related expense for each employee
Ahmed
Carlos
June
Marie
Total
Gross earnings.............
$2,500.00
$1,515.00
$475.00
$1,000.00
$5,490.00
Problem 9-4B (40 minutes)
1.
2015
Nov. 16
Cash ..........................................................................
2,500
Sales ...................................................................
2,500
Sold coffee grinders to customers.
16
Cost of Goods Sold .................................................
1,200
28
Estimated Warranty Liability ..................................
408
Merchandise Inventory .....................................
408
To record cost of coffee grinder
warranty replacements (17 x $24).
Problem 9-4B (Concluded)
2016
Jan. 7
Cash ..........................................................................
2,000
Sales ...................................................................
2,000
Sold coffee grinders to customers.
2. Warranty expense for November 2015 and December 2015
Sales
Percent
Warranty Expense
3. Warranty expense for January 2016
4. Balance of the estimated liability as of December 31, 2015
Warranty expense for November ...................................
$ 250
credit
5. Balance of the estimated liability as of January 31, 2016
Beginning balance ...........................................................
$ 698
credit
Problem 9-5B (60 minutes)
1. Ellis Company
2. Seidel Company
3. Sales increase by 10% (multiply prior sales by 1.10)
Ellis Co.
Seidel Co.
4. Sales increase by 40% (multiply prior sales by 1.40)
Ellis Co.
Seidel Co.
5. Sales increase by 90% (multiply prior sales by 1.90)
Ellis Co.
Seidel Co.
Problem 9-5B (Concluded)
6. Sales decrease by 20% (multiply prior sales by 0.80)
Ellis Co.
Seidel Co.
Sales ........................................
$192,000
$192,000
Variable expenses .................
96,000
144,000
7. Sales decrease by 50% (multiply prior sales by 0.50)
Ellis Co.
Seidel Co.
Sales ........................................
$120,000
$120,000
Variable expenses .................
60,000
90,000
8. Sales decrease by 80% (multiply prior sales by 0.20)
Ellis Co.
Seidel Co.
Sales ........................................
$ 48,000
$ 48,000
Variable expenses .................
24,000
36,000
9. The higher fixed cost strategy (having more fixed interest expense) of
Ellis Co. accentuates the effects of increases and decreases in sales.
That is, increases in sales produce greater increases in net income and
Problem 9-6BA (50 minutes)
June 15
FICASocial Security Taxes Payable ...................
992
FICAMedicare Taxes Payable .............................
232
Employee Fed. Income Taxes Payable ..................
1,050
To record employer payroll taxes.
*Amount earned through 5/31 = 5 x $1,600 = $8,000
Subject to SUTA/FUTA in June = $0
Problem 9-6BA (Concluded)
July 15
FICASocial Security Taxes Payable ...................
992
FICAMedicare Taxes Payable .............................
232
Serial Problem SP 9
Serial Problem SP 9, Business Solutions (30 minutes)
1.
Gross pay (8 days x $125 per day) ...................................
$1,000.00
FICA Social Security tax deduction (6.2%)* .....................
$ 62.00
To record payroll period.
To record employer payroll taxes.
* $1,000 x .04 = $40.00
**$1,000 x .006 = $6.00
4. 2016
Mar. 25
Accounts Receivable Wildcat Services ..............
2,912
Sales ................................................................
2,800
Sales Taxes Payable .........................................
112
Sold merchandise on credit and collected
sales tax of 4%.
To record cost of March 25 sale.
Comprehensive Problem
Bug-Off Exterminators (100 minutes)
Part 1
a. Correct ending balance of cash and the amount of the omitted check
Balance per bank ................................
$15,100
Plus deposit in transit ..........................
2,450
Less outstanding checks .....................
(1,800)
Reconciled balance ..............................
$15,750
b. Allowance for doubtful accounts
Unadjusted balance ..............................
$ 828
credit
c. Depreciation expense on the truck
Cost ................................................................
$32,000
d. Depreciation expense on the equipment
Sprayer
Injector
Comprehensive Problem (Continued)
e. Adjusted revenue and unearned revenue balances
Total advance received ........................................
$ 3,840
Months in contract ................................................
12
Unadjusted balance ..............................................
$60,000
Overstatement .......................................................
(2,240)
Adjusted balance ..................................................
$57,760
Unearned Services Revenue account
Unadjusted balance ..............................................
$ 0
Warranty expense (estimated) ............................
$ 1,444
g. Note payable and interest accrual
Comprehensive Problem (Continued)
Part 2
BUG-OFF EXTERMINATORS
December 31, 2015
Unadjusted
Adjusted
Allowance for
doubtful accounts ..................
$ 828
(b1)
$ 679
(b2)
551
$ 700
Equipment ................................
45,000
45,000
Accum. deprec.Equip ............
12,200
(d)
6,100
18,300
Interest payable ........................
0
0
Long-term notes payable ........
15,000
15,000
services revenue ....................
60,000
(e)
2,240
57,760
Interest revenue ........................
872
(a)
52
924
Deprec. expenseEquip ...........
0
(d)
6,100
6,100
Wages expense .........................
35,000
35,000
Repairs expense .......................
8,000
8,000
Utilities expense ........................
6,800
6,800

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