Question
Youve just started your first accounting job, as the accounts payable and payroll clerk for Copperfield and Company, a provider of delicate wine glasses to
You’ve just started your first accounting job, as the accounts payable and payroll clerk for Copperfield and Company, a provider of delicate wine glasses to restaurants. Your predecessor left his job suddenly, and was not able to complete all his tasks before leaving. You need to get up to speed and complete the unfinished tasks as soon as possible.
Your tasks on your first day are the following:
1. Review the payroll register to determine if there are any errors or omissions.
2. Calculate the relevant amounts for the company’s note payable and determine whether your predecessor’s journal entries are correct.
3. Make a recommendation as to whether the company should journalize any warranty expense for the month.
CHART OF ACCOUNTS:
| Copperfield and Company | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Since this is your first day, you’re relieved to find that the company has only three employees in the main office that have not yet been reviewed. The partial payroll register for these employees is below. Some data is missing, and other data may be in error. Each of these employees earns $18.00 per hour, and the company follows the Fair Labor Standards Act in paying overtime to its employees. You have been assured that the Federal Income Tax withholding and check numbers are correct, so you do not need to check those figures.
Note 1: For 2015, the social security tax rate was 6.2% and the medicare tax rate was 1.45%. However, for text examples and problems, including this one, use rates of 6% for social security tax and 1.5% for medicare tax.
Note 2: Earnings subject to the social security tax are limited to an annual threshold amount, but for text examples and problems, including this one, assume all accumulated annual earnings are below this threshold and subject to the tax.
Review the payroll register below, which was prepared by your predecessor, and then scroll down to complete a corrected payroll register. If there is no amount or an amount is zero, enter “0”. Round your interim computations to the nearest cent, if required.
| | | Earnings | Deductions Withheld | Paid | Account Debited | ||||||
| | Total | | | | Social | Medicare | Federal | | | | Wages |
| Employee Name | Hours | Regular | Overtime | Total | Security Tax | Tax | Income Tax | Total | Net Pay | Check No. | Expense |
| Dartle, Rosa | 40 | 720.00 | | 720.00 | 10.80 | 43.20 | 52.25 | 106.25 | 613.75 | 2355 | 613.75 |
| Traddles, Thomas | 47 | 846.00 | | 846.00 | 12.69 | 50.76 | 63.75 | 127.20 | 718.80 | 2557 | 718.80 |
| Wickfield, Agnes | 40 | 720.00 | | 720.00 | 10.80 | 43.20 | 32.55 | 86.55 | 633.45 | 2892 | 633.45 |
| Total | | 2,286.00 | $0.00 | 2,286.00 | 34.29 | 137.16 | 148.55 | 320.00 | 1,966.00 | | 1,966.00 |
| | | Earnings | Deductions Withheld | Paid | Account Debited | ||||||
| | Total | | | | Social | Medicare | Federal | | | | Wages |
| Employee Name | Hours | Regular | Overtime | Total | Security Tax | Tax | Income Tax | Total | Net Pay | Check No. | Expense |
| Dartle, Rosa | 40 | | | | | | 52.25 | | | 2355 | |
| Traddles, Thomas | 47 | | | | | | 63.75 | | | 2557 | |
| Wickfield, Agnes | 40 | | | | | | 32.55 | | | 2892 | |
| Total | | | | | | | 148.55 | | | | |
Copperfield and Company issued a 90-day, 5.00% note for $190,000 to a creditor on account. The previous clerk entered the following journal entries to record the note on July 10, and the payment of the note at maturity.
PAGE 25
JOURNAL
| | DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT |
| 1 | Jul. 10 | Accounts Payable | | 190,000.00 | |
| 2 | | Notes Payable | | | 190,000.00 |
| 3 | | Notes Payable | | 199,500.00 | |
| 4 | | Accounts Payable | | | 190,000.00 |
|
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Financial AccountingAuthors: LibbyShort 7th Edition 78111021, 978-0078111020 |
