Dali
Trey
Kiesha
Chee
Total
Problem 11-3A (60 minutes)
1. Each employee’s FICA withholdings for Social Security
Dali
Trey
Kiesha
Chee
Total
Maximum base …………..
$118,500
$118,500
$118,500
$118,500
Tax rate ……………………..
6.20%
Social Security tax ……..
$176.70
2. Each employee’s FICA withholdings for Medicare (no limits)
Dali
Trey
Kiesha
Chee
Total
Tax rate ……………………
Medicare tax …………….
3. Employer’s FICA taxes for Social Security
Dali
Trey
Kiesha
Chee
Total
4. Employer’s FICA taxes for Medicare
680
5. Employer’s FUTA taxes
Dali
Trey
Kiesha
Chee
Total
Maximum base ……………..
$ 7,000
$ 7,000
$ 7,000
$ 7,000
6,900
$ 2,000
$ 400
Tax rate ………………………..
0.6%
6. Employer’s SUTA taxes
Dali
Trey
Kiesha
Chee
Total
$ 0
$ 400
Tax rate ………………………
2.15%
7. Each employee’s net (take-home) pay
Dali
Trey
Kiesha
Chee
Total
Gross earnings …………..
$2,000.00
$ 900.00
$450.00
$400.00
$3,750.00
Less
(6.53)
(284.00)
(30.00)
(20.00)
8. Employer’s total payroll–related expense for each employee
Dali
Trey
Kiesha
Chee
Total
Gross earnings ……………
$2,000.00
$ 900.00
$450.00
$400.00
$3,750.00
Plus
FUTA tax ……………………..
SUTA tax ……………………..
681
Problem 11-4A (40 minutes)
1.
2016
Nov. 11
Cash ………………………………………………………………..
7,875
11
2,100
30
16
Cash ………………………………………………………………..
16,500
16,500
16
4,400
31
1,320
682
Problem 11-4A (Concluded)
2017
Jan. 5
Cash ………………………………………………………………..
11,250
11,250
Estimated Warranty Liability …………………………….
Warranty Expense ……………………………………………
2. Warranty expense for November 2016 and December 2016
Sales
Percent
Warranty Expense
November ……………..
December ………………
Total ……………………..
3. Warranty expense for January 2017
Sales in January …………………………
Warranty percent ………………………..
4. Balance of the estimated liability as of December 31, 2016
Warranty expense for November ………………………………
$ 630
credit
Warranty expense for December ………………………………
credit
credit
Warranty expense for January ………………………………..
credit
Problem 11-5A (60 minutes)
1. Miller Company
2. Weaver Company
3. Sales increase by 30% (multiply prior sales by 1.3)
Miller Co.
Weaver Co.
Sales ………………………………………
$1,300,000
$1,300,000
1,040,000
4. Sales increase by 50% (multiply prior sales by 1.5)
Miller Co.
Weaver Co.
Sales ………………………………………
$1,500,000
$1,500,000
5. Sales increase by 80% (multiply prior sales by 1.8)
Miller Co.
Weaver Co.
Sales ………………………………………
$1,800,000
$1,800,000
684
Problem 11-5A (Continued)
6. Sales decrease by 10% (multiply prior sales by 0.9)
Miller Co.
Weaver Co.
Sales ………………………………….
$900,000
$900,000
$120,000
$100,000
7. Sales decrease by 20% (multiply prior sales by 0.8)
Miller Co.
Weaver Co.
Sales ………………………………….
$800,000
$800,000
$100,000
$ 60,000
8. Sales decrease by 40% (multiply prior sales by 0.6)
Miller Co.
Weaver Co.
Sales ………………………………….
$600,000
$600,000
$ 60,000
9. The higher fixed cost strategy (having more fixed interest expense) of
Weaver Co. accentuates the effects of increases and decreases in sales.
That is, increases in sales produce greater increases in net income and
31
State Unemployment Taxes Payable ……………
Federal Unemployment Taxes Payable ………..
Problem 11-6AA (50 minutes)
Mar. 15
FICA⎯Social Security Taxes Payable ……………….
3,472
FICA⎯Medicare Taxes Payable ………………………..
Cash ……………………………………………………….
31
Office Salaries Expense ……………………………………
11,200
16,800
Employee Fed. Income Taxes Payable …………
Salaries Payable …………………………………………
31
21,858
Cash ……………………………………………………….
686
Problem 11-6AA (Concluded)
Apr. 15
FICA⎯Social Security Taxes Payable ……………….
3,472
FICA⎯Medicare Taxes Payable ………………………..
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 11
687
PROBLEM SET B
Problem 11-1B (45 minutes)
Fox–Pro
Spring
Bank
City
Bank
1.
Maturity dates
2.
Interest due at maturity
3.
Accrued interest on City Bank note at the end of 2016
Total interest for note ……………………………………………………….
Accrued interest expense …………………………………………………
4. Interest in 2017
Total interest for note ……………………………………………………….
Term of the note (in days) ……………
Maturity date …………………………..
688
Problem 11-1B (Concluded)
5.
2016
Apr. 22
Merchandise Inventory …………………………………….
5,000
Accounts Payable⎯Fox–Pro ……………………….
5,000
Purchased merchandise on credit.
Notes Payable⎯Fox–Pro ……………………………..
4,600
Notes Payable⎯Spring Bank ………………………
Borrowed cash with a 120-day, 10% note.
Nov. 12
Dec. 6
8,000
Notes Payable⎯City Bank …………………………..
8,000
Accrued interest on note payable.
Paid note with interest.
689
Problem 11-2B (25 minutes)
Part 1
Part 2
690
Problem 11-3B (60 minutes)
1. Each employee’s FICA withholdings for Social Security
Ahmed
Carlos
Jun
Marie
Total
Maximum base ……………
$118,500
$118,500
$118,500
$118,500
Tax rate ………………………
6.20%
6.20%
Social Security tax ………
2. Each employee’s FICA withholdings for Medicare (no limits)
Ahmed
Carlos
Jun
Marie
Total
$ 1,515
Tax rate ………………………
Medicare tax ……………….
$ 21.97
$ 79.61
3. Employer’s FICA taxes for Social Security
Ahmed
Carlos
Jun
Marie
Total
$ 62.00
4. Employer’s FICA taxes for Medicare
Ahmed
Carlos
Jun
Marie
Total
691
Problem 11-3B (Concluded)
5. Employer’s FUTA taxes
Ahmed
Carlos
Jun
Marie
Total
Maximum base …………
$ 7,000
$ 7,000
$ 7,000
$ 7,000
Earned through 9/23 …
Yet under maximum ….
$ 0
$ 0
Earned this week ……..
$ 2,500
$ 1,515
$ 1,000
Subject to tax …………..
$ 0
$ 0
Tax rate ……………………
0.6%
0.6%
6. Employer’s SUTA taxes
Ahmed
Carlos
Jun
Marie
Total
Subject to tax (from 5) .
$ 0
$ 0
Tax rate ……………………
1.75%
1.75%
7. Each employee’s net (take-home pay)
Ahmed
Carlos
Jun
Marie
Total
8. Employer’s total payroll-related expense for each employee
Ahmed
Carlos
Jun
Marie
Total
FUTA tax …………………..
SUTA tax …………………..
692
Problem 11-4B (40 minutes)
1.
2016
Nov. 16
Cash ………………………………………………………………..
2,500
Sales ………………………………………………………….
Sold coffee grinders to customers.
16
1,200
Merchandise Inventory ……………………………….
Record cost of November 16 sale (50 x $24).
Warranty Expense ……………………………………………
250
Estimated Warranty Liability ……………………….
and liability at 10% of selling price.
Dec. 12
Estimated Warranty Liability …………………………….
144
Merchandise Inventory ……………………………….
warranty replacements (6 x $24).
18
Cash ………………………………………………………………..
10,000
Sales ………………………………………………………….
10,000
Sold coffee grinders to customers.
18
4,800
Merchandise Inventory ……………………………….
Record cost of December 18 sale (200 x $24).
28
Estimated Warranty Liability …………………………….
408
Merchandise Inventory ……………………………….
warranty replacements (17 x $24).
31
Warranty Expense ……………………………………………
1,000
Estimated Warranty Liability ……………………….
693
Problem 11-4B (Concluded)
2017
Jan. 7
Cash ………………………………………………………………..
2,000
Estimated Warranty Liability …………………………….
Warranty Expense ……………………………………………
2. Warranty expense for November 2016 and December 2016
Sales
Percent
Warranty Expense
November ……………………
December …………………….
3. Warranty expense for January 2017
Sales in January………………………..
Warranty percent ………………………
4. Balance of the estimated liability as of December 31, 2016
Warranty expense for November ……………………………..
Warranty expense for December………………………………
Warranty expense for January …………………………………
694
Problem 11-5B (60 minutes)
1. Ellis Company
2. Seidel Company
3. Sales increase by 10% (multiply prior sales by 1.10)
Ellis Co.
Seidel Co.
Variable expenses ……………..
Income before interest ……….
4. Sales increase by 40% (multiply prior sales by 1.40)
Ellis Co.
Seidel Co.
Variable expenses ……………..
Income before interest ……….
5. Sales increase by 90% (multiply prior sales by 1.90)
Ellis Co.
Seidel Co.
Variable expenses ……………..
Income before interest ……….
695
Problem 11-5B (Concluded)
6. Sales decrease by 20% (multiply prior sales by 0.80)
Ellis Co.
Seidel Co.
Variable expenses ……………..
Income before interest ……….
7. Sales decrease by 50% (multiply prior sales by 0.50)
Ellis Co.
Seidel Co.
Variable expenses ……………..
Income before interest ……….
8. Sales decrease by 80% (multiply prior sales by 0.20)
Ellis Co.
Seidel Co.
Variable expenses ……………..
Income before interest ……….
9. The higher fixed cost strategy (having more fixed interest expense) of
Ellis Co. accentuates the effects of increases and decreases in sales.
696
Problem 11-6BA (50 minutes)
June 15
FICA—Social Security Taxes Payable ……………….
992
30
30
30
Payroll Taxes Expense* …………………………………….
612