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Print Assignment: Week 7 Homework ::true http://edugen.wileyplus.com/edugen/shared/assignment/test/agprint.uni?n... Week 7 Homework Start Date: 2 May 2011 at 10:00 AM Due Date: Unlimited Student Access after Due Date: Graded: Yes. Attempts after Due Date will be Marked Late Yes Question 1 Jewett Online Company has the following liability accounts after posting adjusting entries: Accounts Payable $63,000, Unearned Ticket Revenue $24,000, Estimated Warranty Liability $18,000, Interest Payable $8,000, Mortgage Payable $120,000, Notes Payable $80,000, and Sales Taxes Payable $10,000. Assume the company's operating cycle is less than 1 year, ticket revenue will be earned within 1 year, warranty costs are expected to be incurred within 1 year, and the notes mature in 3 years. Prepare the current liabilities section of the balance sheet, assuming $30,000 of the mortgage is payable next year. (List liabilities from largest to smallest eg 10, 5, 3, 2.) JEWETT ONLINE COMPANY Partial Balance Sheet Current liabilities $ $ Total current liabilities *Question 2 Cindy Neuer's regular hourly wage rate is $18, and she receives an hourly rate of $22 for work in excess of 40 hours. During a January pay period, Cindy works 49 hours. Cindy's federal income tax withholding is $99, and she has no voluntary deductions. Prepare the journal entries to record (a) C indy's pay for the period and (b) t he payment of Cindy's wages. Use January 15 for the end of the pay period and the payment date. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2. Round answers to 2 decimal places, e.g. 10.50. Note: Assume a FICA rate of 8%.) Date Description (a) J an. 15 Debit Credit (b) J an. 15 Question 3 Hiatt Company sells automatic can openers under a 75-day warranty for defective merchandise. Based on past experience, Hiatt estimates that 3% of the units sold will become defective during the warranty period. Management estimates that the average cost of replacing or repairing a defective unit is $20. The units sold and units defective that occurred during the last 2 months of 2010 are as follows. Units Units Defective Month 1 of 4 6/13/2011 8:26 PM Print Assignment: Week 7 Homework ::true November December Sold 30,000 32,000 http://edugen.wileyplus.com/edugen/shared/assignment/test/agprint.uni?n... Prior to December 31 600 400 Determine the estimated warranty liability at December 31 for the units sold in November and December. $ Prepare the journal entries to record the estimated liability for warranties and the costs incurred in honoring 1,000 warranty claims. (Assume actual costs of $20,000.) Description Debit Credit ( To accrue estimated warranty costs.) ( To record honoring of warranty contracts.) Give the entry to record the honoring of 500 warranty contracts in January at an average cost of $20. Description Debit Credit *Question 4 Brown Inc.'s 2006 financial statements contain the following selected data (in thousands). Current assets Total assets Current liabilities Total liabilities $4,287,118 9,254,611 1,367,495 2,161,011 Compute the following ratios. Working capital (in thousands). $ Current ratio. (Round answer to 2 decimal places, e.g. 10.50.) *Question 5 In January, gross earnings in Vega Company totaled $75,000. All earnings are subject to 8% FICA taxes, 5.4% state unemployment taxes, and 0.8% federal unemployment taxes. Prepare the entry to record January payroll tax expense. 2 of 4 6/13/2011 8:26 PM Print Assignment: Week 7 Homework ::true http://edugen.wileyplus.com/edugen/shared/assignment/test/agprint.uni?n... (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2. Round answers to 0 decimal places, e.g. 125.) Date Description Debit Credit Jan. 31 Question 6 Buffaloe Company has the following obligations at December 31: (a) a n ote payable for $100,000 due in 2 years, (b) a 10-year mortgage payable of $300,000 payable in ten $30,000 annual payments, (c) interest payable of $15,000 on the mortgage, and (d) accounts payable of $60,000. For each obligation, indicate whether it should be classified as a current liability. (Assume an operating cycle of less than one year.) (a) (b) (c) (d) Question 7 In providing accounting services to small businesses, you encounter the following situations pertaining to cash sales. 1. Warkentinne Company rings up sales and sales taxes separately on its cash register. On April 10, the register totals are sales $30,000 and sales taxes $1,500. 2. Rivera Company does not segregate sales and sales taxes. Its register total for April 15 is $23,540, which includes a 7% sales tax. Instructions Prepare the entry to record the sales transactions and related taxes for each client. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.) Date Description W arkentinne Company Debit Credit A pr. 10 Rivera Company A pr. 15 *Question 8 Cerner Company has two fringe benefit plans for its employees: 1. It grants employees 3 days' vacation for each month worked. 13 employees worked the entire month of March at an average daily wage of $128 per employee. 2. In its pension plan the company recognizes 11% of gross earnings as a pension expense. Gross earnings in March were $64,200. No contribution has been made to the pension fund. 3 of 4 6/13/2011 8:26 PM Print Assignment: Week 7 Homework ::true http://edugen.wileyplus.com/edugen/shared/assignment/test/agprint.uni?n... Instructions Prepare the adjusting entries at March 31. Date 1. Mar. 31 Description Debit Credit 2. Mar. 31 4 of 4 6/13/2011 8:26 PM