Youve just started your first accounting job, as the accounts payable and payroll clerk for Copperfield and Company, a provider of delicate wine glasses to restaurants. Your predecessor left the job suddenly, and was not able to complete all the tasks before leaving. You need to get up to speed and complete the unfinished tasks as soon as possible.

Your tasks on your first day are the following:

1. Review the payroll journal entries made by your predecessor.

2. Compute the relevant amounts for the companys short-term note payable and determine whether your predecessors journal entries are correct.

3. Confirm the journal entry for this years payment on an installment note.

4. Make a recommendation as to whether the company should journalize any warranty expense for the month.

You decide to get started - the sooner the better!

Chart of Accounts

CHART OF ACCOUNTS

Copperfield and Company

General Ledger

	ASSETS
110	Cash
112	Accounts Receivable
113	Interest Receivable
114	Notes Receivable
115	Inventory
117	Supplies
118	Prepaid Insurance
120	Land
123	Building
124	Accumulated Depreciation-Building
125	Office Equipment
126	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
211	Salaries Payable
213	Interest Payable
215	Notes Payable
216	Social Security Tax Payable
217	Medicare Tax Payable
218	Employees Federal Income Tax Payable
219	Employees State Income Tax Payable
220	Retirement Contributions Payable
221	Charitable Contributions Payable
222	Medical Insurance Payable
224	Federal Unemployment Tax Payable
225	State Unemployment Tax Payable
228	Product Warranty Payable

	EQUITY
310	Common Stock
311	Retained Earnings
312	Dividends
313	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Goods Sold
520	Sales Salaries Expense
521	Factory Wages Expense
522	Officers Salaries Expense
523	Delivery Expense
524	Depreciation Expense-Building
526	Repairs Expense
529	Selling Expenses
530	Office Salaries Expense
531	Rent Expense
532	Depreciation Expense-Office Equipment
533	Insurance Expense
534	Supplies Expense
535	Payroll Tax Expense
536	Pension Expense
538	Cash Short and Over
539	Product Warranty Expense
540	Miscellaneous Expense
710	Interest Expense

Payroll

Shaded cells have feedback.

The following payroll journal entries for Oct. 15 were made by your predecessor. For FICA tax, assume that the social security rate is 6.0% and the Medicare rate is 1.5%. The state and federal unemployment tax rates are 5.4% and 0.8%, respectively. The company offers 401k plans to employees. Review the journal entries, then answer the questions that follow.

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1	Oct. 15	Sales Salaries Expense		93,000.00
2		Officers Salaries Expense		334,800.00
3		Office Salaries Expense		62,000.00
4		Factory Wages Expense		130,200.00
5		Social Security Tax Payable			37,200.00
6		Medicare Tax Payable			9,300.00
7		Employees Federal Income Tax Payable			111,600.00
8		Medical Insurance Payable			68,200.00
9		Retirement Contributions Payable			93,000.00
10		Salaries Payable			300,700.00
11	15	Payroll Tax Expense		47,833.00
12		Social Security Tax Payable			37,200.00
13		Medicare Tax Payable			9,300.00
14		Federal Unemployment Tax Payable			172.00
15		State Unemployment Tax Payable			1,161.00
16	15	Pension Expense		31,000.00
17		Cash			31,000.00

In order to confirm the previous clerks payroll calculations, you have been asked to supply the following amounts based on your review of the payroll entries. These amounts will be checked against the company records and investigated further if necessary.

1. Determine the payroll amount subject to federal and state unemployment taxes in this payroll.

2. What is the total payroll for Copperfield and Company shown in these journal entries?

3. What is Copperfield and Companys share of FICA taxes in this payroll?

Points:

0 / 1

4. How much has Copperfield and Company contributed to employee 401k plans in this payroll?

Short-Term Note Payable

Shaded cells have feedback.

Copperfield and Company issued a 90-day, 5.00% note for $180,000 to a creditor on account. The previous clerk entered the following journal entries to record the note on July 10, and the payment of the note at maturity.

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1	Jul. 10	Accounts Payable		180,000.00
2		Notes Payable			180,000.00
3		Notes Payable		189,000.00
4		Accounts Payable			180,000.00
5		Interest Expense			9,000.00

You notice that the journal entry for recording the note on July 10 is correct, but the entry for the payment of the note at maturity (including interest) did not have a date and was not correct.

Journalize the payment of the note at maturity as it should have been journalized. Dont forget to include the date. Assume a 360-day year.

Question not attempted.

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3

The following journal entry was made by your predecessor to record the annual payment on a 5%, 10-year installment note.

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1	Oct. 1	Interest Expense	710	178,300.00
2		Notes Payable	215	524,262.00
3		Cash	110		702,562.00

Using the information provided, compute the following amounts.

1. What was the carrying amount (book value) of the installment note before the payment on October 1?

2. What portion of next years payment will be interest? (Round the amount to the nearest dollar.)