Problem 1 A company sells cars, with an included three-year warranty for $30,000 each. During the current year, the company sells 1,000 cars. On the basis of past experience, the warranty costs are estimated to be $1,250 per car. The actual warranty costs (paid in cash) by the company during the current year were $650,000. Prepare general journal entries to record the (A) estimated warranty expense and (B) warranty repair costs during current year. A B Problem 2 A company has 100 employees and a weekly payroll of $300,000. The FICA-social security tax is 6.2% and the FICA-Medicare tax is 1.45%. The total withholding for federal income tax is $85,500 and Wisconsin income tax withholding is $35,000 for the current week. Calculate the amount of FICA taxes owed (assuming no employee's salary is over the FICA limit) and prepare the journal entry to accrue this week's salaries expense and withholdings. |