Paragon Corporation has one employee Mr. Smith. Mr. Smiths earnings for the week ended July 31 amounted to $1,890. His federal and state income taxes are $226.80 and $68.40, respectively. Assume that all of Mr. Smiths wages are subject to Social Security and Medicare and that the employer is levied unemployment taxes on all employee wages. Use tax rates provided in class. a.) Calculate Mr. Smiths net pay for the July 31st pay period. Round to two decimal places and show your work.

b) Prepare the journal entry to record Mr. Smiths payroll assuming Mr. Smith is paid on July 31.

Dates	Accounts	Debit	Credit

c.) Prepare the journal entry to record the employers payroll taxes.

Dates	Accounts	Debit	Credit

d) Contingent Liabilities -ClaimsRUs Corp. is the defendant in three lawsuits. Identify the accounting treatment for each claim (no action, disclose, record). Claim 1: It is possible that the lawsuit will be successful. Damages are estimated at $1.5 million. ____________ Claim 2: It is probable that this lawsuit will be successful. Damages cannot be reasonably estimated yet. ____________ Claim 3: It is probable that this lawsuit will be successful. Damages are estimated at $1 million. ____________