1 - During February, Winter Company's employees earned wages of $50,000. Social security (FICA) withheld was $2,500; federal income taxes withheld were $3,500; and employees' contribution to the United Way withheld totaled $500.Using the accounting equation to record wages expense and wages payable at the end of Feburary. Winter Company will pay employees their February wages and pay the payroll taxes to the government during the first week of March.

2 - When Park Avenue Pet Shop sells a puppy, it provides a health warranty for the little critter.If a puppy becomes ill in the first two years after the sale, Park Avenue Pet Shop will pay the vet bill up to $300.Because this is normally a significant expense for the ship, the accountant insists that Park Avenue Pet Shop records an estimated warranty liability at the end of every year before the financial statements are prepared.On December 31, 2010, the accountant estimated that the warranty costs for puppies sold in 2010 would be $2,000 and made the appropriate entry to record that liability. On March 30, 2011, the store received a $50 vet bill from one of its customers, who had bought a puppy in 2010.Park Avenue Pet Shop wrote a check for the $50 to reimburse the puppy's owner.

a.Enter the transaction into the accounting equation to record the estimated warranty liability at 12/31/2010.

b.Enter the transaction into the accounting equation to record the payment of the vet bill on 3/30/2011. What effect did this payment have on the 2011 financial statements of Park Avenue Pet Shop?

3 - Larry the Locksmith needed some long-term financing and arranged for a $200,000, 20-year mortgage loan on 12/31/2009.The interest rate is 7% per year, with $20,000 (rounded) payments made at the end of each year, starting 12/31/2010.

a.What is the amount of interest expense related to this loan for 2010?

b.What is the amount of liability should appear on the 12/31/2010, balance sheet?

c.What is the amount of interest expense related to this loan for 2011?

d.What is the amount of liability should appear on the 12/31/2011, balance sheet?