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Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 11
Chapter 11
Current Liabilities and Payroll Accounting
QUESTIONS
1. A current liability is expected to be paid within one year or the company’s operating
3. The three questions are: (1) Who must be paid? (2) When is payment due? (3) How
much is to be paid?
7. The employee is responsible for federal income taxes, state income taxes, local
8. An employee’s gross earnings along with the number of withholding allowances that
9. An unemployment merit rating is based on an evaluation of an employer’s
experience in creating or avoiding unemployment with its employees. The merit
10. The obligation to correct or replace defective products (or services) is created when
the products are sold with the warranties. Even though the seller does not know
11. There are no conditions in which a probable loss tied to a future event can create a
12.A A wage bracket withholding table shows for a pay period of a given length (weekly,
14. At September 26, 2015, Apple reports accounts payable of $35,490 million.
15. At December 31, 2015, Google reports the following accrued expenses:
16. At December 31, 2015, Samsung reports eleven current liabilities: Trade and other
17. Samsung’s current liabilities include one income-tax-related liability titled: Income
tax payable. This account reflects taxes that must be paid to the government in the
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 11
661
QUICK STUDIES
Quick Study 11-1 (5 minutes)
Items 1, 4, 5 and 6 are current liabilities for this company.
Quick Study 11-2 (10 minutes)
(1)
Sept. 30
Cash ..........................................................................
6,300
(2)
Quick Study 11-3 (10 minutes)
Oct. 31
Cash ..........................................................................
5,000,000
Quick Study 11-4 (15 minutes)
1. Computation of interest payable at December 31, 2017:
2. 2017
Quick Study 11-4 (concluded)
3. 2018
Feb. 5
Interest Expense ......................................................
1,280
Quick Study 11-5 (15 minutes)
Quick Study 11-6 (15 minutes)
[Note: Two months (January and February) of earnings have
already been recorded for each of the 10 employees.]
Mar. 31
Payroll Taxes Expense ............................................
2,730.00
663
Quick Study 11-7 (5 minutes)
Quick Study 11-8 (5 minutes)
Quick Study 11-9 (10 minutes)
2016
Sep 11
Cash ..........................................................................
500
Sales ....................................................................
500
Quick Study 11-10 (10 minutes)
Quick Study 11-11 (10 minutes)
Quick Study 11-12A (15 minutes)
Gross Pay ..............................................................................
$740.00
Quick Study 11-13B (10 minutes)
Quick Study 11-14 (10 minutes)
a. The definitions and characteristics of current liabilities are broadly
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 11
665
EXERCISES
Exercise 11-1 (10 minutes)
Exercise 11-2 (10 minutes)
[Note: All entries dated December 31, 2017]
1.
Cash ..............................................................................
10,400
Exercise 11-3 (30 minutes)
2a.
May 15
Cash ..........................................................................
110,000
666
Exercise 11-4 (30 minutes)
4a.
2017
667
Exercise 11-5 (20 minutes)
Subject
to Tax
Rate
Tax
Explanation
Exercise 11-6 (10 minutes)
Exercise 11-7 (10 minutes)
668
Exercise 11-8 (30 minutes)
* $7,000 x 40% ** $4,000 x 40%
July 31
Employee Benefits Expense ................................
6,600
669
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
b. FICA Social Security taxes
670
Exercise 11-10 (25 minutes)
5. Journal entries
2017
(a)
Aug. 16
Cash ..........................................................................
6,000
Exercise 11-11 (15 minutes)
1.
2017
2.
2018
Exercise 11-12 (10 minutes)
[Note: All entries dated December 31, 2017.]
Exercise 11-13 (10 minutes)
[Note: All entries dated December 31, 2017.]
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
672
Exercise 11-14 (15 minutes)
(a)
(b)
(c)
(d)
(e)
(f)
Numerator
Income before
Exercise 11-15B (25 minutes)
2.
2017
(a)
Dec. 31
Income Tax Expense ................................................
3,610
Exercise 11-16A (15 minutes)
673
Exercise 11-17 (30 minutes)
(a)
Employee
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
(Current
Period)
Pay
Type
Pay
Hours
Gross Pay
SIT
Withholding
SUTA
FICA S.S.
Employer
FICA
Medicare
Employer
Employer—
Benefits Plan
Expense
Kathleen
116,700.00
Salary
---
7,000.00
2,000.00
0.00
111.60
101.50
350.00
4,136.90
674
Exercise 11-17 (concluded)
(b)
(c)
(d)
(e)
675
Exercise 11-18 (25 minutes)
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 11
676
PROBLEM SET A
Problem 11-1A (45 minutes)
Locust
NBR Bank
Fargo Bank
1.
Maturity dates
2.
Interest due at maturity
3.
Accrued interest on Fargo note at the end of 2016
4.
Interest on Fargo note in 2017
677
Problem 11-1A (Concluded)
5.
2016
Nov. 5
Interest Expense ......................................................
2,400
678
Problem 11-2A (25 minutes)
Part 1
Part 2
