1.) (MULTIPLE CHOICE)

The Manager of Accounts Receivable and Payroll at Drip-Free Gutters, Inc. has asked you to use the information below to prepare all necessary payroll related journal entries for Drip-Free for July. The manager calculated Drip-Frees unemployment taxes for July to be $18,000. Drip-Frees open accounts receivable for July totaled $3,000,000 with $2,000,000 in credit sales for July and the company estimates 2.5% of credit sales to be uncollectable. The total of employee salaries and wages for July are $1,800,000, while employee payroll deductions for income taxes were $230,000 and FICA taxes were $70,000.

Which is the "employee" journal entry? (8 points)

A.) DR Employee Wages Expense 1,800,000

DR Accounts Receivable 3,000,000

CR Employee Income Tax Payable 230,000

CR FICA Taxes Payable 70,000

CR Allowance for Doubtful Accounts 2,000,000

CR Cash 2,500,000

B.) DR Employee Wages Expense 1,800,000

CR Employee Income Tax Payable 230,000

CR FICA Taxes Payable 70,000

CR Unemployment Taxes Payable 18,000

CR Cash 1,482,000

C.) DR Employee Wages Expense 1,800,000

CR Employee Income Tax Payable 230,000

CR FICA Taxes Payable 70,000

CR Cash 1,500,000

D.) DR Employee Wages Expense 1,800,000

DR Bad Debt Expense 1,000,000

CR Employee Income Tax Payable 230,000

CR FICA Taxes Payable 70,000

CR Allowance for Doubtful Accounts 1,000,000

CR Cash 1,500,000

________________________________________________________________________________

2.) (MULTIPLE CHOICE)

The Manager of Accounts Receivable and Payroll at Drip-Free Gutters, Inc. has asked you to use the information below to prepare all necessary payroll related journal entries for Drip-Free for July. The manager calculated Drip-Frees unemployment taxes for July to be $18,000. Drip-Frees open accounts receivable for July totaled $3,000,000 with $2,000,000 in credit sales for July and the company estimates 2.5% of credit sales to be uncollectable. The total of employee salaries and wages for July are $1,800,000, while employee payroll deductions for income taxes were $230,000 and FICA taxes were $70,000.

Which is the "employer" journal entry? (4 points)

A.) DR Employee Wages Expense 88,000

CR FICA Taxes Payable 70,000

CR Unemployment Taxes Payable 18,000

B.) DR Payroll Tax Expense 188,000

CR FICA Taxes Payable 70,000

CR Unemployment Taxes Payable 18,000

CR Cash 100,000

C.) DR Payroll Tax Expense 1,800,000

DR Bad Debt Expense 1,000,000

CR Unemployment Taxes Payable 18,000

CR FICA Taxes Payable 70,000

CR AfDA 1,000,000

CR Cash 1,712,000

D.) DR Payroll Tax Expense 88,000

CR FICA Taxes Payable 70,000

CR Unemployment Taxes Payable 18,000