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1.
The following data are taken from Pierce Corporation’s monthly
payroll for August, 2013:
Administrative salaries $16,000
Sales salaries
32,000
Total payroll
$48,000
Wages subject to FICA taxes (6.2% +
1.45%) $48,000
Wages subject to FUTA and state unemployment
taxes $12,000
Federal income taxes withheld from all
salaries $ 6,200
Assume that the company is subject to a 2.7% state
unemployment tax and a 0.8% federal unemployment tax.
Record the general journal entry to:
a.
Accrue the payroll.
b.
Accrue the employer’s payroll taxes.
____________________________________________________
________________________
2.
The following items represent various types of liabilities.
1. A manufacturing company is sued for alleged product
liability. The company’s attorney does not feel that the suit
will result in liability to the company, but a loss is possible. If
adversely adjudicated, the liability would be material.
2. Omega has sold products to Bright Eye Jewelers, a
retailer that sold the products to customers. The manufacturer’s
warranty offers replacement of the product if it is found to be
defective within 90 days of the sale to the consumer.
Historically, 0.06% of the products are returned for
replacement.
3. A customer has filed a lawsuit for a minor amount
against Bright Eye Jewelers. Bright Eye’s attorneys have
reviewed the case and have found that many similar cases have
never been awarded to the plaintiff.
Identify if the above independent situations should be (a)
recorded in the financial statements, (b) disclosed in a footnote
in the financial statements, or (c) neither.
____________________________________________________
_________________________
3.
On July 1, 2013, Stateside, Inc. issues 10,000 shares of $5 par
value preferred stock at $50 cash per share and 20,000 shares of
$1 par value common stock at $25 cash per share. What is the
journal entry to record these transactions?

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1.The following data are taken from Pierce Corporation’s month.docx

  • 1. 1. The following data are taken from Pierce Corporation’s monthly payroll for August, 2013: Administrative salaries $16,000 Sales salaries 32,000 Total payroll $48,000 Wages subject to FICA taxes (6.2% + 1.45%) $48,000 Wages subject to FUTA and state unemployment taxes $12,000 Federal income taxes withheld from all salaries $ 6,200 Assume that the company is subject to a 2.7% state unemployment tax and a 0.8% federal unemployment tax. Record the general journal entry to: a. Accrue the payroll. b. Accrue the employer’s payroll taxes. ____________________________________________________
  • 2. ________________________ 2. The following items represent various types of liabilities. 1. A manufacturing company is sued for alleged product liability. The company’s attorney does not feel that the suit will result in liability to the company, but a loss is possible. If adversely adjudicated, the liability would be material. 2. Omega has sold products to Bright Eye Jewelers, a retailer that sold the products to customers. The manufacturer’s warranty offers replacement of the product if it is found to be defective within 90 days of the sale to the consumer. Historically, 0.06% of the products are returned for replacement. 3. A customer has filed a lawsuit for a minor amount against Bright Eye Jewelers. Bright Eye’s attorneys have reviewed the case and have found that many similar cases have never been awarded to the plaintiff. Identify if the above independent situations should be (a) recorded in the financial statements, (b) disclosed in a footnote in the financial statements, or (c) neither. ____________________________________________________ _________________________ 3. On July 1, 2013, Stateside, Inc. issues 10,000 shares of $5 par value preferred stock at $50 cash per share and 20,000 shares of
  • 3. $1 par value common stock at $25 cash per share. What is the journal entry to record these transactions?