Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Selected transactions of Shadrach Computer Corporation during November and December of 2019 are as follows: 20 Paid $2,200 in fulfillment of the warranty agreement on

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Selected transactions of Shadrach Computer Corporation during November and December of 2019 are as follows: 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 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. December Transactions: 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 individual's car while on personal business. The amount of the suit flled was $1,350. Because the employee was on personal business, the company's insurance company will not pay the claim. In Shadrach's attorney's 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 employee's salary exceeded the maximum wage limit. 31 Recorded president's bonus. The president receives a 10% bonus on any income over $220,000, before deducting income taxes and the bonus. Shadrach's effective income tax rate is 30%, and income before income taxes and bonus for 2019 was $600,000. The bonus will be paid in January 2020 . Required: Prepare journal entries to record the preceding transactions of Shadrach Computer Corporation for 2019. Include year-end accruals

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Statement Fraud Strategies For Detection And Investigation

Authors: Gerard M. Zack

1st Edition

1118301552, 9781118301555

More Books

Students also viewed these Accounting questions

Question

Identify the main sources of stress and how it affects health.

Answered: 1 week ago