Required information Skip to question [The following information applies to the questions displayed below.] The following transactions
Fantastic news! We've Found the answer you've been seeking!
Question:
Required informationSkip to question
[The following information applies to the questions displayed below.]
The following transactions apply to Park Company for Year 1:
- Received $28,000 cash from the issue of common stock.
- Purchased inventory on account for $141,000.
- Sold inventory for $172,500 cash that had cost $105,500. Sales tax was collected at the rate of 7 percent on the inventory sold.
- Borrowed $18,000 from First State Bank on March 1, Year 1. The note had a 7 percent interest rate and a one-year term to maturity.
- Paid the accounts payable (see transaction 2).
- Paid the sales tax due on $150,500 of sales. Sales tax on the other $22,000 is not due until after the end of the year.
- Salaries for the year for one employee amounted to $26,000. Assume the Social Security tax rate is 6 percent and the Medicare tax rate is 1.5 percent. Federal income tax withheld was $5,200.
- Paid $2,600 for warranty repairs during the year.
- Paid $12,000 of other operating expenses during the year.
- Paid a dividend of $5,100 to the shareholders.
Adjustments:
- The products sold in transaction 3 were warranted. Park estimated that the warranty cost would be 5 percent of sales.
- Record the accrued interest at December 31, Year 1.
- Record the accrued payroll tax at December 31, Year 1. Assume no payroll taxes have been paid for the year and that the unemployment tax rate is 6.0 percent (federal unemployment tax rate is 0.60 percent and the state unemployment tax rate is 5.40 percent on the first $7,000 of earnings per employee).
equired: a. Record the preceding transactions in general journal form. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
- Received $28,000 cash from the issue of common stock. Record the transaction.
- Purchased inventory on account for $141,000. Record the transaction.
- Sold inventory for $172,500 cash. Sales tax was collected at the rate of 7 percent on the inventory sold. Record the transaction.
- The cost of goods sold was $105,500. Record the transaction.
- Borrowed $18,000 from First State Bank on March 1, Year 1. The note had a 7 percent interest rate and a one-year term to maturity. Record the transaction.
- Paid accounts payable for inventory purchased in transaction 2. Record the transaction.
- Paid the sales tax due on $150,500 of sales. Sales tax on the other $22,000 is not due until after the end of the year. Record the transaction.
- Salaries for the year for one employee amounted to $26,000. Assume the Social Security tax rate is 6 percent and the Medicare tax rate is 1.5 percent. Federal income tax withheld was $5,200. Record the transaction.
- Paid $2,600 for warranty repairs during the year. Record the transaction.
- Paid $12,000 of other operating expenses during the year. Record the transaction.
- Paid a dividend of $5,100 to the shareholders. Record the transaction.
- The products sold in transaction 3 were warranted. Park estimated that the warranty cost would be 5 percent of sales. Record the transaction.
- Interest accrued on $18,000 note as at December 31. Record the transaction.
- Assume no payroll taxes have been paid for the year and that the unemployment tax rate is 6 percent (the federal unemployment tax rate is 0.6 percent, and the state unemployment tax rate is 5.40 percent on the first $7,000 of earnings per employee). Record the accrued payroll tax.c-1. Prepare an income statement for Year 1. B.c-2.Create a statement of changes in stockholders' equity for Year 1. c-3. Create a balance sheet for Year 1. c-4.Create a statement of cash flows for Year 1.
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date: