1.)

Current Liabilities

New Wave Co. sold 19,000 annual subscriptions ofGame Lifefor $55 during December 2014. These new subscribers will receive monthly issues, beginning in January 2015. In addition, the business had taxable income of $660,000 during the first calendar quarter of 2015. The federal tax rate is 40%. A quarterly tax payment will be made on April 7, 2015.

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Prepare the Current Liabilities section of the balance sheet for New Wave Co. on March 31, 2015.

New Wave Co.
Current Liabilities Section of Balance Sheet
March 31, 2015
Current liabilities:
Federal income taxes payable	$
Advances on magazine subscriptions
Total current liabilities	$

2.)

Entries for Notes Payable

A business issued a 90-day, 6% note for $54,000 to a creditor on account. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including interest. Assume a 360-day year.

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For a compound transaction, if an amount box does not require an entry, leave it blank.

a.
b.

3.)

Fixed Asset Purchases with Note

On June 30, Rioux Management Company purchased land for $640,000 and a building for $960,000, paying $800,000 cash and issuing a 7% note for the balance, secured by a mortgage on the property. The terms of the note provide for 20 semiannual payments of $40,000 on the principal plus the interest accrued from the date of the preceding payment.

For a compound transaction, if an amount box does not require an entry, leave it blank.

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a. Journalize the entry to record the transaction on June 30.

June 30

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b. Journalize the entry to record the payment of the first installment on December 31.

Dec. 31

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c. Journalize the entry to record the payment of the second installment the following June 30.

June 30

4.)

CalculatePayroll

An employee earns $36 per hour and 1.5 times that rate for all hours in excess of 40 hours per week. Assume that the employee worked 55 hours during the week, and that thegross payprior to the current week totaled $52,200. Assume further that the social security tax rate was 6.0%, the Medicare tax rate was 1.5%, and federal income tax to be withheld was $518.

If required, round your answers to two decimal places.

a. Determine the gross pay for the week. $

b. Determine thenet payfor the week. $

5.)

PayrollEntries

Thepayroll registerfor Robinson Company for the week ended November 18 indicated the following:

Salaries	$678,000
Social security tax withheld	31,866
Medicare tax withheld	10,170
Federal income tax withheld	135,600

In addition, state and federal unemployment taxes were calculated at the rate of 5.2% and 0.8%, respectively, on $13,000 of salaries.

For a compound transaction, if an amount box does not require an entry, leave it blank.

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a. Journalize the entry to record the payroll for the week of November 18.

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b. Journalize the entry to record the payroll tax expense incurred for the week of November 18.

6.)

Accrued Product Warranty

Lachgar Industries warrants its products for one year. The estimated product warranty is 4% of sales. Assume that sales were $228,000 for September. In October, a customer received warranty repairs requiring $155 of parts and $95 of labor.

For a compound transaction, if an amount box does not require an entry, leave it blank.

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a. Journalize the adjusting entry required at September 30, the end of the first month of the current fiscal year, to record the accrued product warranty.

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b. Journalize the entry to record the warranty work provided in October.

7.)

Liability Transactions

The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year:

Feb. 15.	Purchased merchandise on account from Hood Co., $408,000, terms n/30.
Mar. 17.	Issued a 60-day, 8% note for $408,000 to Hood Co., on account.
May 16	Paid Hood Co. the amount owed on the note of March 17.
June 15.	Borrowed $166,800 from Acme Bank, issuing a 60-day, 9% note.
July 21.	Purchased tools by issuing a $102,000, 90-day note to Columbia Supply Co., which discounted the note at the rate of 9%.
Aug. 14.	Paid Acme Bank the interest due on the note of June 15 and renewed the loan by issuing a new 60-day, 10% note for $166,800. (Journalize both the debit and credit to the notes payable account.)
Oct. 15.	Paid Acme Bank the amount due on the note of August 14.
Oct. 19.	Paid Columbia Supply Co. the amount due on the note of July 21.
Dec. 1.	Purchased office equipment from Mountain Equipment Co. for $144,000, paying $24,000 and issuing a series of ten 6% notes for $12,000 each, coming due at 30-day intervals.
Dec. 12.	Settled a product liability lawsuit with a customer for $71,000, payable in January. Emerald Bay accrued the loss in a litigation claims payable account.
Dec. 31.	Paid the amount due Mountain Equipment Co. on the first note in the series issued on December 1.

Required:

1. Journalize the transactions. If an amount box does not require an entry, leave it blank. Assume a 360-day year. If required, round to one decimal place.

Feb. 15	SelectAccounts Payable - Hood Co.CashLitigation Claims PayableMerchandise InventoryNotes PayableItem 1
	SelectAccounts Payable - Hood Co.CashMerchandise InventoryNotes PayableOffice EquipmentItem 3
Mar.17	SelectAccounts Payable - Hood Co.CashInterest ExpenseMerchandise InventoryNotes PayableItem 5
	SelectAccounts Payable - Hood Co.CashMerchandise InventoryNotes PayableOffice EquipmentItem 7
May 16	SelectAccounts Payable - Hood Co.Accounts Receivable - Hood Co.CashMerchandise InventoryNotes PayableItem 9
	SelectAccounts Payable - Hood Co.Accounts Receivable - Hood Co.CashInterest ExpenseMerchandise InventoryItem 12
	SelectAccounts Payable - Hood Co.CashInterest ExpenseMerchandise InventoryNotes PayableItem 15
June15	SelectAccounts PayableCashInterest ExpenseMerchandise InventoryNotes PayableItem 18
	SelectAccounts PayableCashLitigation Claims PayableMerchandise InventoryNotes PayableItem 20
July21	SelectAccounts PayableCashMerchandise InventoryNotes PayableToolsItem 22
	SelectAccounts PayableAccounts ReceivableCashInterest ExpenseOffice EquipmentItem 25
	SelectAccounts PayableCashInterest ExpenseNotes PayableToolsItem 28
Aug.14	SelectAccounts PayableCashLitigation Claims PayableNotes PayableToolsItem 31
	SelectAccounts PayableCashInterest ExpenseLitigation Claims PayableToolsItem 34
	SelectAccounts ReceivableLitigation LossMerchandise InventoryNotes PayableOffice EquipmentItem 37
	SelectAccounts PayableCashMerchandise InventoryOffice EquipmentToolsItem 40
Oct. 15	SelectAccounts Payable - Acme BankAccounts Receivable - Hood Co.CashMerchandise InventoryNotes PayableItem 43
	SelectAccounts Payable - Acme BankAccounts Receivable - Hood Co.CashInterest ExpenseMerchandise InventoryItem 46
	SelectAccounts Payable - Acme BankCashInterest ExpenseMerchandise InventoryNotes PayableItem 49
Oct. 19	SelectAccounts PayableCashLitigation Claims PayableMerchandise InventoryNotes PayableItem 52
	SelectCashInterest ExpenseMerchandise InventoryNotes PayableOffice EquipmentItem 54
Dec. 1	SelectCashInterest ExpenseLitigation Claims PayableNotes PayableOffice EquipmentItem 56
	SelectAccounts PayableInterest ExpenseMerchandise InventoryNotes PayableOffice EquipmentItem 59
	SelectCashInterest ExpenseMerchandise InventoryOffice EquipmentToolsItem 62
Dec. 12	SelectCashInterest ExpenseLitigation Claims PayableLitigation LossNotes PayableItem 65
	SelectCashInterest ExpenseLitigation Claims PayableLitigation LossNotes PayableItem 67
Dec. 31	SelectAccounts Payable - Mountain Equipment Co.Accounts Receivable - Mountain Equipment Co.CashMerchandise InventoryNotes PayableItem 69
	SelectAccounts Payable - Mountain Equipment Co.Accounts Receivable - Mountain Equipment Co.CashInterest ExpenseMerchandise InventoryItem 72
	SelectAccounts Payable - Mountain Equipment Co.CashInterest ExpenseMerchandise InventoryNotes PayableItem 75

2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year: (a) product warranty cost, $14,800; (b) interest on the nine remaining notes owed to Mountain Equipment Co.

a.	SelectCashLitigation Claims PayableLitigation LossProduct Warranty ExpenseProduct Warranty PayableItem 78
	SelectCashLitigation Claims PayableLitigation LossProduct Warranty ExpenseProduct Warranty PayableItem 80
b.	SelectCashInterest ExpenseInterest PayableNotes PayableProduct Warranty PayableItem 82
	SelectCashInterest ExpenseInterest PayableProduct Warranty ExpenseProduct Warranty PayableItem 84