Selected transactions of Shadrach Computer Corporation during November and December of 2016 are as follows:

Nov.	1	Borrowed money from the bank by issuing a non-interest-bearing, $20,000, 90-day note. The note is discounted on a 12% basis.
	9	Sold 125 computers with a 1-year assurance-type warranty for $6,000 each on credit (ignore cost of goods sold). Past experience indicates that warranty costs average $105 per computer.
	12	Sold 125 software packages at $260 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, 2017. The cost of each USB drive is $10, and Shadrach estimates that 80% of the premiums will be redeemed; therefore, 100 USB drives were purchased on credit.
	20	Paid $2,200 in fulfillment of the warranty agreement on several of the computers sold on November 9.
	30	Accrued monthly vacation pay. Shadrach has 90 employees who are each paid an average of $190 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 $436,000. 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. These rates apply to all salaries because no employees 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 2016.
Dec.	14	Twenty proofs of purchase were returned from the November 12 sale.
	29	An individual filed suit against Shadrach for damages caused in a November 5 accident that resulted when a member of the sales force hit the individuals car while on personal business. The amount of the suit filed was $1,350. Because the employee was on personal business, the companys insurance company will not pay the claim. In Shadrachs attorneys opinion, the amount of the suit is reasonable; furthermore, the company believes it is likely to lose the suit.
	31	Accrued monthly vacation pay.
	31	Paid monthly payroll. Gross salaries were $439,000. The salaries included $6,100 of vacation pay in the sales force and $3,500 of vacation pay in the office staff. The F.I.C.A. tax rate still applies to all wages because no employees salary exceeded the maximum wage limit.
	31	Recorded presidents bonus. The president receives a 10% bonus on any income over $220,000, before deducting income taxes and the bonus. Shadrachs effective income tax rate is 30%, and income before income taxes and bonus for 2016 was $600,000. The bonus will be paid in January 2017.

	Required:
	Prepare journal entries to record the preceding transactions of Shadrach Computer Corporation for 2016. Include year-end accruals. Round all calculations to the nearest dollar.

CHART OF ACCOUNTS

Shadrach Computer Corporation

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
132	Inventory of Premiums
152	Prepaid Insurance
181	Equipment
189	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
221	Bonus Payable
222	Liability for Compensated Absences
224	FICA Taxes Payable
225	Federal Income Taxes Withholding Payable
231	Salaries Payable
240	Estimated Warranty Liability
241	Estimated Premium Liability
245	Estimated Liability from Lawsuit
250	Unearned Revenue
260	Notes Payable
261	Discount on Notes Payable
271	Federal Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
522	Payroll Taxes Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
551	Warranty Expense
552	Premium Expense
559	Miscellaneous Expenses
561	Loss from Accident
910	Income Tax Expense

Prepare journal entries to record the November transactions of Shadrach Computer Corporation for 2016. Include year-end accruals. Round all calculations to the nearest dollar. Additional Instructions

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GENERAL JOURNAL

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Prepare journal entries to record the December transactions of Shadrach Computer Corporation for 2016. Include year-end accruals. Round all calculations to the nearest dollar. Additional Instructions

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GENERAL JOURNAL

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