Liability 1.  Payroll accounting . Assume that the following tax rates and payroll information pertain to Brookhaven Publishing:  ·  Social Security taxes: 4% on the first $55,000 earned per employee ·  Medicare taxes: 1.5% on the first $130,000 earned per employee ·  Federal income taxes withheld from wages: $7,500  ·  State income taxes: 4% of gross earnings  ·  Insurance withholdings: 1% of gross earnings  ·  State unemployment taxes: 5.4% on the first $7,000 earned per employee ·  Federal unemployment taxes: 0.8% on the first $7,000 earned per employee The company incurred a salary expense of $50,000 during February. All employees had earned less than $5,000 by month-end and no wages have been paid during the month.  a. Prepare the necessary entry to record Brookhaven’s February payroll. The entry will include deductions for the following: ·  Social Security taxes ·  Medicare taxes ·  Federal income taxes withheld ·  State income taxes ·  Insurance withholdings b. Prepare the journal entry to record Brookhaven’s payroll tax expense. The entry will include the following: ·  Matching Social Security taxes ·  Matching Medicare taxes ·  State unemployment taxes ·  Federal unemployment taxes 2.  Current liabilities: entries and disclosure.  A review of selected financial activities of Visconti’s during 20XX disclosed the following:  1-Dec: Borrowed $10,000 from the First City Bank by signing a 3-month, 15% note payable. Interest and principal are due at maturity. 10-Dec: Established a warranty liability for the XY-80, a new product. Sales are expected to total 1,000 units during the month.  Past experience with similar products indicates that 3% of the units will require repair, with warranty costs averaging $27 per unit (parts only). 22-Dec: Purchased $16,000 of merchandise on account from Oregon Company, terms 2/10, n/30. 26-Dec: Borrowed $5,000 from First City Bank; signed a 15% note payable due in 60 days. (Assume 360 day year for interest) 31-Dec: Repaired six XY-80s during the month at a total cost of $162 31-Dec: Accrued three days of salaries at a total cost of $1,400. Instructions  a. Prepare journal entries to record the transactions.  b. Prepare adjusting entries on December 31 to record accrued interest for each of the notes payable. 3.  Notes payable . Red Bank Enterprises was involved in the following transactions during the fiscal year ending October 31: 2-Aug: Borrowed $55,000 from the Bank of Kingsville by signing a 90-day, 12% note. 20-Aug: Issued a $50,000 note to Harris Motors for the purchase of a $50,000 delivery truck. The note is due in 180 days and carries a 12% interest r ate. 10-Sep: Purchased merchandise from Pans Enterprises in the amount of $15,000.  Issued a 30-day, 12% note in settlement of the balance owed. 11-Sep: Issued a $60,000 note to Datatex Equipment in settlement of an overdue account payable of the same amount.  The note is due in 30 days and carries a 14% interest rate. 10-Oct: The n.

1. Liability
1.
Payroll accounting
. Assume that the following tax rates and payroll information pe
rtain to Brookhaven Publishing:
·
Social Security taxes: 4% on the first $55,000 earned per emplo
yee
·
Medicare taxes: 1.5% on the first $130,000 earned per employee
·
Federal income taxes withheld from wages: $7,500
·
State income taxes: 4% of gross earnings
·
Insurance withholdings: 1% of gross earnings
·
State unemployment taxes: 5.4% on the first $7,000 earned per e
mployee
·
Federal unemployment taxes: 0.8% on the first $7,000 earned pe
r employee
The company incurred a salary expense of $50,000 during Febru
ary. All employees had earned less than $5,000 by month-
end and no wages have been paid during the month.
a. Prepare the necessary entry to record Brookhaven’s February
payroll. The entry will include deductions for the following:
·
Social Security taxes
·
Medicare taxes
·
Federal income taxes withheld

2. ·
State income taxes
·
Insurance withholdings
b. Prepare the journal entry to record Brookhaven’s payroll tax
expense. The entry will include the following:
·
Matching Social Security taxes
·
Matching Medicare taxes
·
State unemployment taxes
·
Federal unemployment taxes
2. Current liabilities: entries and disclosure.
A review of selected financial activities of Visconti’s during 20
XX disclosed the following:
1-
Dec: Borrowed $10,000 from the First City Bank by signing a 3-
month, 15% note payable.
Interest and principal are due at maturity.
10-Dec: Established a warranty liability for the XY-
80, a new product. Sales are expected to
total 1,000 units during the month. Past experience with similar
products indicates
that 3% of the units will require repair, with warranty costs aver

3. aging $27 per unit (parts only).
22-
Dec: Purchased $16,000 of merchandise on account from Orego
n Company, terms 2/10, n/30.
26-
Dec: Borrowed $5,000 from First City Bank; signed a 15% note
payable due in 60 days. (Assume 360 day year for interest)
31-Dec: Repaired six XY-
80s during the month at a total cost of $162
31-Dec: Accrued three days of salaries at a total cost of $1,400.
Instructions
a. Prepare journal entries to record the transactions.
b. Prepare adjusting entries on December 31 to record accrued i
nterest for each of the notes payable.
3.
Notes payable
. Red Bank Enterprises was involved in the following transactio
ns during the fiscal year ending October 31:
2-
Aug: Borrowed $55,000 from the Bank of Kingsville by signing
a 90-day, 12% note.
20-
Aug: Issued a $50,000 note to Harris Motors for the purchase of
a $50,000 delivery truck. The note is due in 180 days and carrie
s a 12% interest r ate.
10-
Sep: Purchased merchandise from Pans Enterprises in the amoun
t of $15,000. Issued
a 30-day, 12% note in settlement of the balance owed.
11-

4. Sep: Issued a $60,000 note to Datatex Equipment in settlement
of an overdue account
payable of the same amount. The note is due in 30 days and car
ries a 14% interest rate.
10-Oct: The note to Pans Enterprises was paid in full.
11-Oct: The note to Datatex Equipment was paid in full.
30-Oct: Paid note to Bank of Kingsville.
Instructions
a. Prepare journal entries to record the transactions.
b. Prepare adjusting entries on December 31 to record accrued i
nterest. (Daily interest is calculated utilizing the 360 day metho
d).
c. Prepare the Current Liability section of Red Bank’s balance s
heet as of December 31. Assume that the Accounts Payable acco
unt totals $203,600 on this date.