1.

Federal Income Tax Withholding

Bob Wolfe's weekly gross earnings for the present week were $2,290. Wolfe has four exemptions. Using the wage bracket withholding table in Exhibit 2 with a $75 standard withholding allowance for each exemption, what is Wolfe's federal income tax withholding? Round your answer to two decimal places.

$

2.

Estimated Warranty Liability

Cook-Rite Co. sold $651,000 of equipment during January under a six-month warranty. The cost to repair defects under the warranty is estimated at 4% of the sales price. On August 15, a customer required a $274 part replacement, plus $101 of labor under the warranty.

Required:

(a) Provide the journal entry for the estimated warranty expense on January 31 for January sales.

Jan. 31	Accounts Payable
	Product Warranty Expense

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Contingent liability entries are needed when the amount can be reasonably estimated and the liability is probable. Recorded contingent liabilities follow the matching concept. Contingent liabilities are an accrued expense adjusting entry.

(b) Provide the journal entry for the August 15 warranty work. If an amount box does not require an entry, leave it blank.

Aug. 15

Table for Percentage Method of Withholding WEEKLY Payroll Period EXHIBIT 2 Wage Bracket Withholding Table (a) SINGLE person (including head of household) - If the amount of wages (after subtracting withholding allowances) The amount of income tax is: to withhold is: Not over $43...... $0 Over But not over- of excess over- $43 - $222 .. $0.00 plus 10% $43 $222 - $767 .. $17.90 plus 15% $222 $767 -$1,796 .. $99.65 plus 25% $767 $1,796 -$3,700 .. $356.90 plus 28% $1,796 $3,700 -$7,992 .. $890.02 plus 33% $3,700 $7,992 -$8,025 .. $2,306.38 plus 35% $7,992 $8,025 $2,317.93 plus 39.6% $8,025 McGrath wage bracket