A business issued a 30-day, 7% note for $36,000 to a creditor on account.
Question # 00108963
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Updated on: 09/27/2015 01:32 PM Due on: 10/27/2015
Notes payable
Obj|2
A business issued a 30-day, 7% note for $36,000 to a creditor on account. Illustrate the effects on the accounts and financial statements of recording (a) the issuance of the note and (b) the payment of the note at maturity, including interest.
E8-5
Accrued product warranty
Obj|2
Fungus Audio Works Inc. warrants its products for one year. The estimated product warranty is 3% of sales. Assume that sales were $680,000 for January. In February, a customer received warranty repairs requiring $4,200 of parts.
- a.Determine the warranty liability at January 31, the end of the first month of the current year.
- b.What accounts are decreased for the warranty work provided in February?
E8-11
Recording payroll taxes
Obj|2
According to a summary of the payroll of Apline Publishing Co., $460,000 was subject to the 7.5% FICA tax. Also, $39,000 was subject to state and federal unemployment taxes.
- a.Calculate the employer's payroll taxes, using the following rates: state unemployment, 4.3%; federal unemployment, 0.8%.
- b.Illustrate the effects on the accounts and financial statements of recording the accrual of payroll taxes.
Exercise 8-2
a. Issuance of the note:
Statement of
Cash Flows
Balance Sheet
Liabilities +
Stockholders’ Equity
b. Payment of the note, at maturity, including interest
Statement of
Balance Sheet
Cash Flows
Assets =
Liabilities +
Stockholders’ Equity
Assets =
Income Statement
Income Statement
Exercise 8-5
a.
b.
Show your work for part a.
Exercise 8-11
Show your work.
a.
b.
Statement of
Cash Flows
Balance Sheet
Assets =
Liabilities
Income Statement
+ Stockholders’ Equity
Retained Earnings
a. Issuance of the note:
Statement of
Cash Flows
Balance Sheet
Liabilities +
Stockholders’ Equity
b. Payment of the note, at maturity, including interest
Statement of
Balance Sheet
Cash Flows
Assets =
Liabilities +
Stockholders’ Equity
Assets =
Income Statement
Income Statement
Exercise 8-5
a.
b.
Show your work for part a.
Exercise 8-11
Show your work.
a.
b.
Statement of
Cash Flows
Balance Sheet
Assets =
Liabilities
Income Statement
+ Stockholders’ Equity
Retained Earnings
-
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Solution: A business issued a 30-day, 7% note for $36,000 to a creditor on account.