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Nov. 1 Borrowed money from the bank by issuing a non-interest-bearing, $58,000,90-day note. The note is discounted on a 12% basis. 9 Sold 125 computers
Nov. 1 Borrowed money from the bank by issuing a non-interest-bearing, $58,000,90-day note. The note is discounted on a 12% basis. 9 Sold 125 computers with a 1-year assurance-type warranty for $5,600 each on credit (ignore cost of goods sold). Past experience indicates that warranty costs average $110 per computer. 12 Sold 125 software packages at \$270 each on credit (ignore cost of goods sold). With each software package, Shadrach offered a premium in the form of a USB drive for the return of one proof of purchase. The offer expires June 30, 2020. The cost of each USB drive is $5, and Shadrach estimates that 80% of the premiums will be redeemed; therefore, 100 USB drives were purchased on credit. 20 Paid $2,000 in fulfillment of the warranty agreement on several of the computers sold on November 9. 30 Accrued monthly vacation pay. Shadrach has 80 employees who are each paid an average of $180 per day. Shadrach has a policy of allowing each employee 12 days' paid vacation per year, the related liability is recorded on a monthly basis. Employees are paid monthly. 30 paid monthly payroll. Gross salaries were $430,000. No vacations were taken during November. Income tax withholdings of 20% are applicable to the salaries of all employees. A F.I.C.A. tax of 8% for both employees and employers is also applicable to the entire amount of gross salaries. These rates apply to all salaries because no employee's salary has exceeded the maximum wage limit. The state allows the corporation a 1% unemployment compensation merit-rating reduction from the normal rate of 5.4%. The federal unemployment rate is 0.6%. Prior to October, each individual employee had accumulated a gross salary in excess of $7,000 for 2019
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