Exercise $8-66$

Accrued Liabilities

Thornwood Tile had the following items that require adjusting entries at the end of the year.

a$.$ Thornwood pays payroll of $$180,000$ every other Friday for a $2-$week period. This year the last payday is Friday, December $26.($Note: The work week is Monday through Friday.$)$

b$.$ Thornwood purchased $$350,000$ of tile on June $1$ with a note payable requiring $12\%$ interest. The interest and principal on this note are due within $1$ year. As of December $31,$ Thornwood had not made any principal or interest payments.

c$.$ Thornwood's earned income is $$900,000$ for the year for tax purposes. Its effective tax rate is $30\%.$ These taxes must be paid by April $15$ of next year.

Required:

Prepare the adjusting journal entries to record these transactions at the end of the current year.

Dec. $31$

$($Record accrued wages$)$

Dec. $31.$

$($Record accrued interest$)$

Dec. $31$

$($Record accrued income taxes$)$