Part I (6 points) Lynbrook, Inc. has decided to begin processing monthly payroll transactions in house, rather than using a Payroll Service Company, like ADP. On January 25, 2019, the end of the first monthly pay period of the year, Lynbrooks payroll register showed that employees earned $25,000 of office salaries and $80,000 of sales salaries. Withholdings from the employees' salaries include FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, $15,000 of federal income taxes, $1,400 of medical insurance deductions, and $900 of union dues. No employee earned more than $7,000 in January.

Required: 1. Prepare the journal entry related to the gross pay earned by employees on January 25. (Round amounts to two decimals.)

2. Prepare the journal entry related to the payroll taxes from the January 25th payroll. Lynbrooks merit rating reduces its state unemployment tax rate to 4% of the first $7,000 paid each employee. The federal unemployment tax rate is 0.6%. (Round amounts to two decimals.)

Part II (4 points) Lynbrook, Inc. purchased inventory with an invoice price of $30,000 from Scan House, LLC. on October 18, 2019 with payment terms of 2/10, n/45. Lynbrook attempts to take advantage of all discounts, so its policy is to record purchases of inventory using the Net Method. On October 25, 2019, Lynbrook paid $20,000 of the original invoice of $30,000, leaving a balance of $10,000. On November 15, 2019, Lynbrook paid the balance of the invoice.

Required: Prepare the journal entries that Lynbrook would make on the following dates:

October 18, 2019

October 25, 2019

November 15, 2019