CHAPTER 11 Current Liabilities and Payroll
Prob. 11–3A
1. Gross Federal Income Social Security Medicare
Earnings Tax Withheld Tax Withheld Tax Withheld
Arnett………………… $ 8,250.00 $ 1,512.00 $ 495.00 $ 123.75
2. a. Social security tax paid by employer…………………………………………… $19,780.80
Employee
CHAPTER 11 Current Liabilities and Payroll
Prob. 11–4A
1.
Social Federal U.S. Sales Office
Total Security Medicare Income Savings Net Ck. Salaries Salaries
Employee Hours Regular Overtime Total Tax Tax Tax Bonds Total Pay No. Expense Expense
Aaron 46 2,720.00 612.00 3,332.00 199.92 49.98 766.36 100.00 1,116.26 2,215.74 901 3,332.00
Cobb 41 2,480.00 93.00 2,573.00 154.38 38.60 553.20 110.00 856.18 1,716.82 902 2,573.00
2. Sales Salaries Expense 19,060.00
Office Salaries Expense 3,800.00
PAYROLL FOR WEEK ENDING December 7, 2014
EARNINGS DEDUCTIONS PAID ACCOUNT DEBITED
CHAPTER 11 Current Liabilities and Payroll
Prob. 11–5A
1. Dec. 2 Bond Deductions Payable 3,400
Cash 3,400
13 Salaries Payable 46,296
Cash 46,296
CHAPTER 11 Current Liabilities and Payroll
Prob. 11–5A (Concluded)
Dec. 27 Operations Salaries Expense 42,800
Officers Salaries Expense 28,000
27 Employees State Income Tax Payable 20,884
Cash 20,884
2. a. Dec. 31 Operations Salaries Expense 8,560
Officers Salaries Expense 5,600
CHAPTER 11 Current Liabilities and Payroll
Prob. 11–1B
1. Apr. 15 Cash 225,000
Notes Payable 225,000
May 1 Equipment 310,400
Oct. 28 Notes Payable 320,000
Cash 320,000
CHAPTER 11 Current Liabilities and Payroll
Prob. 11–1B (Concluded)
2. a. Product Warranty Expense 26,800
Product Warranty Payable 26,800
CHAPTER 11 Current Liabilities and Payroll
Prob. 11–2B
1. a. Dec. 30 Sales Salaries Expense 625,000
Warehouse Salaries Expense 240,000
2. a. Dec. 30 Sales Salaries Expense 625,000
Warehouse Salaries Expense 240,000
Office Salaries Expense 320,000
CHAPTER 11 Current Liabilities and Payroll
Prob. 11–3B
1. Gross Federal Income Social Security Medicare
Earnings* Tax Withheld Tax Withheld Tax Withheld
Addai…………………
…
$44,880 $ 9,372 $ 2,692.80 $ 673.20
2. a. Social security tax paid by employer………………………………………
…
$17,163.90
…
Employee
CHAPTER 11 Current Liabilities and Payroll
Prob. 11–4B
1.
Social Federal U.S. Sales Office
Total Security Medicare Income Savings Net Ck. Salaries Salaries
Employee Hours Regular Overtime Total Tax Tax Tax Bonds Total Pay No. Expense Expense
Carlton 52 2,000.00 900.00 2,900.00 174.00 43.50 667.00 60.00 944.50 1,955.50 328 2,900.00
Grove 4,000.00 240.00 60.00 860.00 100.00 1,260.00 2,740.00 329 4,000.00
2. Sales Salaries Expense 16,743.00
Office Salaries Expense 7,200.00
PAYROLL FOR WEEK ENDING December 7, 2014
EARNINGS DEDUCTIONS PAID ACCOUNT DEBITED
CHAPTER 11 Current Liabilities and Payroll
Prob. 11–5B
1. Dec. 1 Medical Insurance Payable 2,520
Cash 2,520
1 Social Security Tax Payable 2,913
CHAPTER 11 Current Liabilities and Payroll
Prob. 11–5B (Concluded)
Dec. 26 Sales Salaries Expense 14,250
Officers Salaries Expense 7,250
2. Dec. 31 Sales Salaries Expense 4,275
Officers Salaries Expense 2,175
CHAPTER 11 Current Liabilities and Payroll
1. Jan. 3 Petty Cash 4,500
Cash 4,500
Feb. 26 Office Supplies 1,680
Miscellaneous Selling Expense 570
Miscellaneous Administrative Expense 880
COMPREHENSIVE PROBLEM 3
CHAPTER 11 Current Liabilities and Payroll
Comp. Prob. 3 (Continued)
Sept. 15 Land 654,925
Interest Expense 15,075
Social Security Tax Payable 12,735
Medicare Tax Payable 3,184
Salaries Payable 157,065
30 Payroll Tax Expense 16,229
Social Security Tax Payable 12,735
CHAPTER 11 Current Liabilities and Payroll
Comp. Prob. 3 (Continued)
2.
Balance according to bank statement $283,000
3. Miscellaneous Expense 750
4. a. Bad Debt Expense 18,000
Allowance for Doubtful Accounts 18,000
To record estimated uncollectible accounts,
$16,000 + $2,000.
KORNETT COMPANY
Bank Reconciliation
December 31, 2014
CHAPTER 11 Current Liabilities and Payroll
Comp. Prob. 3 (Continued)
e. Depreciation Expense—Buildings 36,000
Depreciation Expense—Office Equipment 44,000
f. Amortization Expense—Patents 6,000
Patents 6,000
To record patent amortization,
$48,000 ÷ 8 years.
CHAPTER 11 Current Liabilities and Payroll
Comp. Prob. 3 (Continued)
5.
Current assets:
Petty cash $ 4,500
Cash 243,960
KORNETT COMPANY
Balance Sheet
December 31, 2014
Assets
CHAPTER 11 Current Liabilities and Payroll
Comp. Prob. 3 (Concluded)
Current liabilities:
Social security tax payable $ 25,470
Medicare tax payable 4,710
Liabilities
CHAPTER 11 Current Liabilities and Payroll
CP 11–1
The firm has no implicit or explicit contract to pay any bonus. The bonus is
discretionary, even if the firm paid a two-week bonus for 10 straight years. The
firm is not behaving unethically for reducing the bonus to one week—regardless
CP 11–2
Sumana’s interpretation of the pension issue is correct. The employee earns the
pension during the working years. The pension is part of the employee’s
compensation that is deferred until retirement. Thus, Felton should record an
CASES & PROJECTS
CHAPTER 11 Current Liabilities and Payroll
CP 11–3
a. The so-called “underground economy” hides transactions from IRS scrutiny
by conducting business with cash (not check or credit card, which leaves an
audit trail). The intent in many such transactions is to evade income tax
illegally. However, just because a transaction is in cash does not exempt it
CP 11–4
The purpose of this activity is to familiarize students with retrieving and using IRS
forms. Students should be able to find the three required forms without much
difficulty. Encourage students to retrieve the forms from the IRS Web site, since
CP 11–5
This activity does not require the student to research the contingency notes for
Altria Group. The contingency disclosure is extensive and complicated. Rather, the
student should identify Altria Group’s main business, and from this information