The general ledger of Quick Ship at June 30, 2016, the end of the company’s fiscal year, includes the following account balances before payroll and adjusting entries.
Accounts Payable............$ 114,000
Interest Payable............ 0
Salaries Payable............ 0
Employee Income Taxes Payable...... 0
FICA—OASDI Taxes Payable...... 0
FICA—Medicare Taxes Payable...... 0
Federal Unemployment Taxes Payable ...... 0
State Unemployment Taxes Payable...... 0
Unearned Rent Revenue........ 6,000
Long-term Notes Payable........ 300,000
The additional data needed to develop the payroll and adjusting entries at June 30 are as follows:
a. The long-term debt is payable in annual installments of $60,000, with the next installment due on July 31. On that date, Quick Ship will also pay one years interest at 10%. Interest was paid on July 31 of the preceding year. Make the adjusting entry to accrue interest expense at year-end.
b. Gross unpaid salaries for the last payroll of the fiscal year were $4,500. Assume that employee income taxes withheld are $900 and that all earnings are subject to OASDI.
c. Record the associated employer taxes payable for the last payroll of the fiscal year, $4,500. Assume that the earnings are not subject to unemployment.
d. On February 1, the company collected one year’s rent of $6,000 in advance.
Requirements
1. Using T-accounts, open the listed accounts and insert the unadjusted June 30 balances.
2. Journalize and post the June 30 payroll and adjusting entries to the accounts that you opened. Identify each adjusting entry by letter.
3. Prepare the current liabilities section of the balance sheet at June 30, 2016.