Quiz#7

payroll. Salaries $ 500,000 Federal income taxes to be withheld 100,000 Federal unemployment tax rate 0.60% State unemployment tax rate 5.40% Social security tax rate 6.20% Medicare tax rate 1.45% Required: Calculate the income and payroll taxes for the January 2024 pay period. Prepare the appropriate journal entries to record salaries expense and payroll tax expense for the January 2024 pay period. Salaries are not yet paid.  Payroll Tax General Journal  Complete this question by entering your answers in the tabs below. Prepare the appropriate journal entries to record salaries expense and payroll tax expense for the January 2024 pay period. Salaries are not yet paid. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Payroll Tax General Journal No Event General Journal Debit Credit 1 1 Salaries expense 500,000 Withholding taxes payable 100,000 Social security taxes payable 31,000 Medicare taxes payable 7,250 Salaries payable 361,750 2 2 Payroll tax expense 68,250 Social security taxes payable 31,000 Medicare taxes payable 7,250 Federal unemployment tax payable 3,000 State unemployment tax payable 27,000 Explanation: Social security taxes payable: ($500,000 × 6.2%) = $31,000. Medicare taxes payable: ($500,000 × 1.45%) = $7,250. Federal unemployment tax payable: ($500,000 × 0.6%) = $3,000. State unemployment tax payable: ($500,000 × 5.4%) = $27,000.

Medicare tax rate 1.45% Required: Calculate the income and payroll taxes for the January 2024 pay period. Prepare the appropriate journal entries to record salaries expense and payroll tax expense for the January 2024 pay period. Salaries are not yet paid.  Payroll Tax General Journal  Complete this question by entering your answers in the tabs below. Calculate the income and payroll taxes for the January 2024 pay period. Payroll Tax General Journal $ Tax Amount withheld from employees' gross pay Amount paid by employer Federal income taxes to be withheld 100,000 Social Security tax 31,000 31,000 Medicare tax 7,250 7,250 Federal unemployment tax 3,000 State unemployment tax 27,000 Total $ 138,250 $ 68,250 F F Explanation: Social security taxes payable: ($500,000 × 6.2%) = $31,000. Medicare taxes payable: ($500,000 × 1.45%) = $7,250. Federal unemployment tax payable: ($500,000 × 0.6%) = $3,000. State unemployment tax payable: ($500,000 × 5.4%) = $27,000.

Difficulty: 2 Medium Learning Objective: 13-06 Demonstrate the appropriate accounting treatment for contingencies, including unasserted claims and assessments. The following selected circumstances relate to pending lawsuits for Erismus, Incorporated Erismus’s fiscal year ends on December 31. Financial statements are issued in March 2025. Erismus prepares its financial statements according to IFRS. Required: Indicate the amount Erismus would record as an asset, a liability or if no accrual would be necessary in the following circumstances. 1. Erismus is defending against a lawsuit. Erismus's management believes the company has a slightly worse than 50/50 chance of eventually prevailing in court, and that if it loses, the judgment will be $1,000,000. 2. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages could fall anywhere in the range of $2,000,000 to $4,000,000, with any damage in that range equally likely. 3. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages will eventually be $5,000,000, with a present value of $3,500,000. 4. Erismus is a plaintiff in a lawsuit. Erismus's management believes it is probable that the company eventually will prevail in court, and that if it prevails, the judgment will be $1,000,000. 5. Erismus is a plaintiff in a lawsuit. Erismus’s management believes it is virtually certain that the company eventually will prevail in court, and that if it prevails, the judgment will be $500,000. $ $ $ $ Classification Amount 1. Liability 1,000,000 2. Liability 3,000,000 3. Liability 3,500,000 4. Not accrued 5. Asset 500,000 Explanation: 1. Erismus would recognize a liability of $1,000,000, as IFRS defines “probable” as “more likely than not” (> 50%), and it is more likely than not to lose in court.

8. Award: 1 out of 1.00 point The following selected transactions relate to contingencies of Classical Tool Makers, Incorporated, which began operations in July 2024. Classical’s fiscal year ends on December 31. Financial statements are issued in April 2025. 1. Classical's products carry a one-year warranty against manufacturer’s defects. Based on previous experience, warranty costs are expected to approximate 4% of sales. Sales were $2 million (all credit) for 2024. Actual warranty expenditures were $30,800 and were recorded as warranty expense when incurred. 2. Although no customer accounts have been shown to be uncollectible, Classical estimates that 2% of credit sales will eventually prove uncollectible. 3. In December 2024, the state of Tennessee filed suit against Classical, seeking penalties for violations of clean air laws. On January 23, 2025, Classical reached a settlement with state authorities to pay $1.5 million in penalties. 4. Classical is the plaintiff in a $4 million lawsuit filed against a supplier. The suit is in final appeal and attorneys advise that it is virtually certain that Classical will win the case and be awarded $2.5 million, an amount that is material to Classical. 5. In November 2024, Classical became aware of a design flaw in an industrial saw that poses a potential electrical hazard. A product recall appears unavoidable. Such an action would likely cost the company $500,000. 6. Classical offered $25 cash rebates on a new model of jigsaw. Customers must mail in a proof-of-purchase seal from the package plus the cash register receipt to receive the rebate. Experience suggests that 60% of the rebates will be claimed. Ten thousand of the jigsaws were sold in 2024. Total rebates to customers in 2024 were $105,000 and were recorded as promotional expense when paid. Required: 1-a. Prepare the year-end entries for any amounts that should be recorded as a result of each of the above contingencies. 1-b. Indicate whether a disclosure note is needed for the above transactions.  Req 1A Req 1B  Complete this question by entering your answers in the tabs below. Indicate whether a disclosure note is needed for the above transactions. Req 1A Req 1B Event 1 Yes  Event 2 Yes  Event 3 Yes  Event 4 Yes  Event 5 Yes  Event 6 Yes  References General Journal Learning Objective: 13-05 Identify situations that constitute contingencies and the circumstances under which they should be accrued. Difficulty: 2 Medium Learning Objective: 13-06 Demonstrate the appropriate accounting treatment for contingencies, including unasserted claims and assessments.

Score: 10/10 Points 100 %

 Req 1A Req 1B  Complete this question by entering your answers in the tabs below. Prepare the year-end entries for any amounts that should be recorded as a result of each of the above contingencies. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars. Req 1A Req 1B No Event General Journal Debit Credit 1 1 Warranty expense 49,200 Estimated warranty liability 49,200 2 2 Bad debt expense 40,000 Allowance for uncollectible accounts 40,000 3 3 Loss—litigation 1,500,000 Liability—litigation 1,500,000 4 4 No journal entry required 5 5 Loss—product recall 500,000 Liability—product recall 500,000 6 6 Promotional expense 45,000 Estimated premium liability 45,000 Explanation: 1-a. and 1-b. 1. Warranty expense: ([4% × $2,000,000] − $30,800) = $49,200. Disclosure note indicated: Yes 2. Bad debt expense: (2% × $2,000,000) = $40,000. Disclosure note indicated: Yes 3. This is a loss contingency. Classical can use the information occurring after the end of the year and before the financial statements are issued to determine appropriate disclosure. Disclosure note indicated: Yes 4. This is a gain contingency. Gain contingencies are not accrued even if the gain is probable and reasonably estimable. The gain should be recognized only when realized. A disclosure note is appropriate. Disclosure note indicated: Yes 5. Disclosure note indicated: Yes 6. Promotional expense: ([60% × $25 × $10,000] − $105,000) = $45,000. Disclosure note indicated: Yes

7. Award: 1 out of 1.00 point The Manda Panda Company uses the allowance method to account for bad debts. At the beginning of 2024, the allowance account had a credit balance of $75,000. Credit sales for 2024 totaled $2,400,000 and the year-end accounts receivable balance was $490,000. During this year, $73,000 in receivables were determined to be uncollectible. Manda Panda anticipates that 3% of all credit sales will ultimately become uncollectible. The fiscal year ends on December 31. Required: 1. Does this situation describe a loss contingency? 2. What is the bad debt expense that Manda Panda should report in its 2024 income statement? 3. Prepare the appropriate journal entry to record the contingency. 4. Complete the table below to calculate the net accounts receivable value Manda Panda should report in its 2024 balance sheet.  Required 3 Required 4  Complete this question by entering your answers in the tabs below. Complete the table below to calculate the net accounts receivable value Manda Panda should report in its 2024 balance sheet. Required 1 Required 2 Required 3 Required 4 Balance Sheet (Partial) Accounts receivable $ 490,000  Allowance for uncollectible accounts (74,000)  Net accounts receivable $ 416,000  References General Journal Learning Objective: 13-05 Identify situations that constitute contingencies and the circumstances under which they should be accrued. Difficulty: 2 Medium Learning Objective: 13-06 Demonstrate the appropriate accounting treatment for contingencies, including unasserted claims and assessments. The Manda Panda Company uses the allowance method to account for bad debts. At the beginning of 2024, the allowance account had a credit balance of $75,000. Credit sales for 2024 totaled $2,400,000 and the year-end accounts receivable balance was $490,000. During this year, $73,000 in receivables were determined to be uncollectible. Manda Panda anticipates that 3% of all credit sales will ultimately become uncollectible. The fiscal year ends on December 31. Required: 1. Does this situation describe a loss contingency? 2. What is the bad debt expense that Manda Panda should report in its 2024 income statement?

3. Prepare the appropriate journal entry to record the contingency. 4. Complete the table below to calculate the net accounts receivable value Manda Panda should report in its 2024 balance sheet.  Required 3 Required 4  Complete this question by entering your answers in the tabs below. Complete the table below to calculate the net accounts receivable value Manda Panda should report in its 2024 balance sheet. Required 1 Required 2 Required 3 Required 4 $ $ Balance Sheet (Partial) Accounts receivable 490,000 Allowance for uncollectible accounts (74,000) Net accounts receivable 416,000 Explanation: 1. This is a loss contingency. Some loss contingencies don't involve liabilities at all. Some contingencies when resolved cause a noncash asset to be impaired, so accruing it means reducing the related asset rather than recording a liability. The most common loss contingency of this type is an uncollectible receivable, as described in this situation. 2. Bad debt expense: 3% × $2,400,000 = $72,000. 4. Allowance for uncollectible accounts: Beginning of 2024 $ 75,000 Write off of bad debts* (73,000) Credit balance before accrual $ 2,000 Year-end accrual (Required 3) 72,000 End of 2024 $ 74,000 General Journal Debit Credit * Allowance for uncollectible accounts 73,000 Accounts receivable 73,000 Net accounts receivable: Accounts receivable $ 490,000 Less: Allowance for uncollectible accounts (74,000) Net accounts receivable $ 416,000

Score: 10/10 Points 100 %

7. Award: 1 out of 1.00 point The Manda Panda Company uses the allowance method to account for bad debts. At the beginning of 2024, the allowance account had a credit balance of $75,000. Credit sales for 2024 totaled $2,400,000 and the year-end accounts receivable balance was $490,000. During this year, $73,000 in receivables were determined to be uncollectible. Manda Panda anticipates that 3% of all credit sales will ultimately become uncollectible. The fiscal year ends on December 31. Required: 1. Does this situation describe a loss contingency? 2. What is the bad debt expense that Manda Panda should report in its 2024 income statement? 3. Prepare the appropriate journal entry to record the contingency. 4. Complete the table below to calculate the net accounts receivable value Manda Panda should report in its 2024 balance sheet.  Required 2 Required 4  Complete this question by entering your answers in the tabs below. Prepare the appropriate journal entry to record the contingency. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Required 1 Required 2 Required 3 Required 4 No Event General Journal Debit Credit 1 1 Bad debt expense  72,000  Allowance for uncollectible accounts  72,000  References General Journal Learning Objective: 13-05 Identify situations that constitute contingencies and the circumstances under which they should be accrued. Difficulty: 2 Medium Learning Objective: 13-06 Demonstrate the appropriate accounting treatment for contingencies, including unasserted claims and assessments.

The Manda Panda Company uses the allowance method to account for bad debts. At the beginning of 2024, the allowance account had a credit balance of $75,000. Credit sales for 2024 totaled $2,400,000 and the year-end accounts receivable balance was $490,000. During this year, $73,000 in receivables were determined to be uncollectible. Manda Panda anticipates that 3% of all credit sales will ultimately become uncollectible. The fiscal year ends on December 31. Required: 1. Does this situation describe a loss contingency? 2. What is the bad debt expense that Manda Panda should report in its 2024 income statement? 3. Prepare the appropriate journal entry to record the contingency. 4. Complete the table below to calculate the net accounts receivable value Manda Panda should report in its 2024 balance sheet.  Required 2 Required 4  Complete this question by entering your answers in the tabs below. Prepare the appropriate journal entry to record the contingency. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Required 1 Required 2 Required 3 Required 4 No Event General Journal Debit Credit 1 1 Bad debt expense 72,000 Allowance for uncollectible accounts 72,000 Explanation: 1. This is a loss contingency. Some loss contingencies don't involve liabilities at all. Some contingencies when resolved cause a noncash asset to be impaired, so accruing it means reducing the related asset rather than recording a liability. The most common loss contingency of this type is an uncollectible receivable, as described in this situation. 2. Bad debt expense: 3% × $2,400,000 = $72,000. 4. Allowance for uncollectible accounts: Beginning of 2024 $ 75,000 Write off of bad debts* (73,000) Credit balance before accrual $ 2,000 Year-end accrual (Required 3) 72,000 End of 2024 $ 74,000

General Journal Debit Credit * Allowance for uncollectible accounts 73,000 Accounts receivable 73,000 Net accounts receivable: Accounts receivable $ 490,000 Less: Allowance for uncollectible accounts (74,000) Net accounts receivable $ 416,000

Score: 10/10 Points 100 %

7. Award: 1 out of 1.00 point The Manda Panda Company uses the allowance method to account for bad debts. At the beginning of 2024, the allowance account had a credit balance of $75,000. Credit sales for 2024 totaled $2,400,000 and the year-end accounts receivable balance was $490,000. During this year, $73,000 in receivables were determined to be uncollectible. Manda Panda anticipates that 3% of all credit sales will ultimately become uncollectible. The fiscal year ends on December 31. Required: 1. Does this situation describe a loss contingency? 2. What is the bad debt expense that Manda Panda should report in its 2024 income statement? 3. Prepare the appropriate journal entry to record the contingency. 4. Complete the table below to calculate the net accounts receivable value Manda Panda should report in its 2024 balance sheet.  Required 1 Required 3  Complete this question by entering your answers in the tabs below. What is the bad debt expense that Manda Panda should report in its 2024 income statement? Required 1 Required 2 Required 3 Required 4 Bad debt expense $ 72,000  References General Journal Learning Objective: 13-05 Identify situations that constitute contingencies and the circumstances under which they should be accrued. Difficulty: 2 Medium Learning Objective: 13-06 Demonstrate the appropriate accounting treatment for contingencies, including unasserted claims and assessments. The Manda Panda Company uses the allowance method to account for bad debts. At the beginning of 2024, the allowance account had a credit balance of $75,000. Credit sales for 2024 totaled $2,400,000 and the year-end accounts receivable balance was $490,000. During this year, $73,000 in receivables were determined to be uncollectible. Manda Panda anticipates that 3% of all credit sales will ultimately become uncollectible. The fiscal year ends on December 31. Required: 1. Does this situation describe a loss contingency? 2. What is the bad debt expense that Manda Panda should report in its 2024 income statement? 3. Prepare the appropriate journal entry to record the contingency. 4. Complete the table below to calculate the net accounts receivable value Manda Panda should report in its 2024 balance sheet.

 Required 1 Required 3  Complete this question by entering your answers in the tabs below. What is the bad debt expense that Manda Panda should report in its 2024 income statement? Required 1 Required 2 Required 3 Required 4 $ Bad debt expense 72,000 Explanation: 1. This is a loss contingency. Some loss contingencies don't involve liabilities at all. Some contingencies when resolved cause a noncash asset to be impaired, so accruing it means reducing the related asset rather than recording a liability. The most common loss contingency of this type is an uncollectible receivable, as described in this situation. 2. Bad debt expense: 3% × $2,400,000 = $72,000. 4. Allowance for uncollectible accounts: Beginning of 2024 $ 75,000 Write off of bad debts* (73,000) Credit balance before accrual $ 2,000 Year-end accrual (Required 3) 72,000 End of 2024 $ 74,000 General Journal Debit Credit * Allowance for uncollectible accounts 73,000 Accounts receivable 73,000 Net accounts receivable: Accounts receivable $ 490,000 Less: Allowance for uncollectible accounts (74,000) Net accounts receivable $ 416,000

Score: 10/10 Points 100 %

7. Award: 1 out of 1.00 point The Manda Panda Company uses the allowance method to account for bad debts. At the beginning of 2024, the allowance account had a credit balance of $75,000. Credit sales for 2024 totaled $2,400,000 and the year-end accounts receivable balance was $490,000. During this year, $73,000 in receivables were determined to be uncollectible. Manda Panda anticipates that 3% of all credit sales will ultimately become uncollectible. The fiscal year ends on December 31. Required: 1. Does this situation describe a loss contingency? 2. What is the bad debt expense that Manda Panda should report in its 2024 income statement? 3. Prepare the appropriate journal entry to record the contingency. 4. Complete the table below to calculate the net accounts receivable value Manda Panda should report in its 2024 balance sheet.  Required 1 Required 2  Complete this question by entering your answers in the tabs below. Does this situation describe a loss contingency? Required 1 Required 2 Required 3 Required 4 Loss contingency Yes  References General Journal Learning Objective: 13-05 Identify situations that constitute contingencies and the circumstances under which they should be accrued. Difficulty: 2 Medium Learning Objective: 13-06 Demonstrate the appropriate accounting treatment for contingencies, including unasserted claims and assessments. The Manda Panda Company uses the allowance method to account for bad debts. At the beginning of 2024, the allowance account had a credit balance of $75,000. Credit sales for 2024 totaled $2,400,000 and the year-end accounts receivable balance was $490,000. During this year, $73,000 in receivables were determined to be uncollectible. Manda Panda anticipates that 3% of all credit sales will ultimately become uncollectible. The fiscal year ends on December 31. Required: 1. Does this situation describe a loss contingency? 2. What is the bad debt expense that Manda Panda should report in its 2024 income statement? 3. Prepare the appropriate journal entry to record the contingency. 4. Complete the table below to calculate the net accounts receivable value Manda Panda should report in its 2024 balance sheet.

 Required 1 Required 2  Complete this question by entering your answers in the tabs below. Does this situation describe a loss contingency? Required 1 Required 2 Required 3 Required 4 Loss contingency Yes Explanation: 1. This is a loss contingency. Some loss contingencies don't involve liabilities at all. Some contingencies when resolved cause a noncash asset to be impaired, so accruing it means reducing the related asset rather than recording a liability. The most common loss contingency of this type is an uncollectible receivable, as described in this situation. 2. Bad debt expense: 3% × $2,400,000 = $72,000. 4. Allowance for uncollectible accounts: Beginning of 2024 $ 75,000 Write off of bad debts* (73,000) Credit balance before accrual $ 2,000 Year-end accrual (Required 3) 72,000 End of 2024 $ 74,000 General Journal Debit Credit * Allowance for uncollectible accounts 73,000 Accounts receivable 73,000 Net accounts receivable: Accounts receivable $ 490,000 Less: Allowance for uncollectible accounts (74,000) Net accounts receivable $ 416,000

Score: 10/10 Points 100 %

6. Award: 1 out of 1.00 point Diversified Semiconductors sells perishable electronic components. Some must be shipped and stored in reusable protective containers. Customers pay a deposit for each container received. The deposit is equal to the container’s cost. They receive a refund when the container is returned. During 2024, deposits collected on containers shipped were $850,000. Deposits are forfeited if containers are not returned within 18 months. Containers held by customers at January 1, 2024, represented deposits of $530,000. In 2024, $790,000 was refunded and deposits forfeited were $35,000. Required: 1. Prepare the appropriate journal entries for the deposits received, returned, and forfeited during 2024. 2. Determine the liability for refundable deposits to be reported on the December 31, 2024, balance sheet.  Required 1 Required 2  Complete this question by entering your answers in the tabs below. Determine the liability for refundable deposits to be reported on the December 31, 2024, balance sheet. Required 1 Required 2 Balance on December 31 $ 555,000  References General Journal Difficulty: 2 Medium Learning Objective: 13-03 Characterize accrued liabilities and liabilities from advance collection and describe when and how they should be recorded. Diversified Semiconductors sells perishable electronic components. Some must be shipped and stored in reusable protective containers. Customers pay a deposit for each container received. The deposit is equal to the container’s cost. They receive a refund when the container is returned. During 2024, deposits collected on containers shipped were $850,000. Deposits are forfeited if containers are not returned within 18 months. Containers held by customers at January 1, 2024, represented deposits of $530,000. In 2024, $790,000 was refunded and deposits forfeited were $35,000. Required: 1. Prepare the appropriate journal entries for the deposits received, returned, and forfeited during 2024. 2. Determine the liability for refundable deposits to be reported on the December 31, 2024, balance sheet.

 Required 1 Required 2  Complete this question by entering your answers in the tabs below. Determine the liability for refundable deposits to be reported on the December 31, 2024, balance sheet. Required 1 Required 2 $ Balance on December 31 555,000 Explanation: 2. Liability for Refundable Deposits Balance on January 1 $ 530,000 Deposits received 850,000 Deposits returned (790,000) Deposits forfeited (35,000) Balance on December 31 $ 555,000

Score: 10/10 Points 100 %

6. Award: 1 out of 1.00 point Diversified Semiconductors sells perishable electronic components. Some must be shipped and stored in reusable protective containers. Customers pay a deposit for each container received. The deposit is equal to the container’s cost. They receive a refund when the container is returned. During 2024, deposits collected on containers shipped were $850,000. Deposits are forfeited if containers are not returned within 18 months. Containers held by customers at January 1, 2024, represented deposits of $530,000. In 2024, $790,000 was refunded and deposits forfeited were $35,000. Required: 1. Prepare the appropriate journal entries for the deposits received, returned, and forfeited during 2024. 2. Determine the liability for refundable deposits to be reported on the December 31, 2024, balance sheet.  Required 1 Required 2  Complete this question by entering your answers in the tabs below. Prepare the appropriate journal entries for the deposits received, returned, and forfeited during 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Required 1 Required 2 No Transaction General Journal Debit Credit 1 1 Cash  850,000  Liability—refundable deposits  850,000  2 2 Liability—refundable deposits  790,000  Cash  790,000  3 3 Liability—refundable deposits  35,000  Revenue—sale of containers  35,000  4 4 Cost of goods sold  35,000  Inventory of containers  35,000  References General Journal Difficulty: 2 Medium Learning Objective: 13-03 Characterize accrued liabilities and liabilities from advance collection and describe when and how they should be recorded. Diversified Semiconductors sells perishable electronic components. Some must be shipped and stored in reusable protective containers. Customers pay a deposit for each container received. The deposit is equal to the container’s cost. They receive a refund when the container is returned. During 2024, deposits collected on containers shipped were $850,000. Deposits are forfeited if containers are not returned within 18 months. Containers held by customers at January 1, 2024, represented deposits of $530,000. In 2024, $790,000 was refunded and deposits forfeited were $35,000.

Required: 1. Prepare the appropriate journal entries for the deposits received, returned, and forfeited during 2024. 2. Determine the liability for refundable deposits to be reported on the December 31, 2024, balance sheet.  Required 1 Required 2  Complete this question by entering your answers in the tabs below. Prepare the appropriate journal entries for the deposits received, returned, and forfeited during 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Required 1 Required 2 No Transaction General Journal Debit Credit 1 1 Cash 850,000 Liability—refundable deposits 850,000 2 2 Liability—refundable deposits 790,000 Cash 790,000 3 3 Liability—refundable deposits 35,000 Revenue—sale of containers 35,000 4 4 Cost of goods sold 35,000 Inventory of containers 35,000 Explanation: 2. Liability for Refundable Deposits Balance on January 1 $ 530,000 Deposits received 850,000 Deposits returned (790,000) Deposits forfeited (35,000) Balance on December 31 $ 555,000

Score: 10/10 Points 100 %

5. Award: 1 out of 1.00 point On January 1, 2024, Poplar Fabricators Corporation agreed to grant its employees two weeks of vacation each year, with the stipulation that vacations earned each year can be taken the following year. For the year ended December 31, 2024, Poplar Fabricators’ employees each earned an average of $850 per week. Nine hundred vacation weeks earned in 2024 were not taken during 2024. Required: 1. Prepare the appropriate adjusting entry for vacations earned but not taken in 2024. 2. Suppose that, by the time vacations actually are taken in 2025, salary rates for employees have risen by an average of 4 percent from their 2024 level. Also, assume salaries earned in 2025 (including vacations earned and taken in 2025) were $39 million. Prepare a journal entry that summarizes 2025 salaries and the payment for 2024 vacations taken in 2025.  Required 1 Required 2  Complete this question by entering your answers in the tabs below. Suppose that, by the time vacations actually are taken in 2025, salary rates for employees have risen by an average of 4 percent from their 2024 level. Also, assume salaries earned in 2025 (including vacations earned and taken in 2025) were $39 million. Prepare a journal entry that summarizes 2025 salaries and the payment for 2024 vacations taken in 2025. Note: Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Required 1 Required 2 Show less  No Event General Journal Debit Credit 1 1 Liability—compensated future absences  765,000  Salaries expense  39,030,600  Cash  39,795,600  References General Journal Difficulty: 2 Medium Learning Objective: 13-03 Characterize accrued liabilities and liabilities from advance collection and describe when and how they should be recorded. On January 1, 2024, Poplar Fabricators Corporation agreed to grant its employees two weeks of vacation each year, with the stipulation that vacations earned each year can be taken the following year. For the year ended December 31, 2024, Poplar Fabricators’ employees each earned an average of $850 per week. Nine hundred vacation weeks earned in 2024 were not taken during 2024. Required: 1. Prepare the appropriate adjusting entry for vacations earned but not taken in 2024. 2. Suppose that, by the time vacations actually are taken in 2025, salary rates for employees have risen by an average of 4 percent from their 2024 level. Also, assume salaries earned in 2025 (including vacations earned and taken in 2025) were $39 million. Prepare a journal entry that summarizes 2025 salaries and the payment for 2024 vacations taken in 2025.

 Required 1 Required 2  Complete this question by entering your answers in the tabs below. Suppose that, by the time vacations actually are taken in 2025, salary rates for employees have risen by an average of 4 percent from their 2024 level. Also, assume salaries earned in 2025 (including vacations earned and taken in 2025) were $39 million. Prepare a journal entry that summarizes 2025 salaries and the payment for 2024 vacations taken in 2025. Note: Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Required 1 Required 2 Show less  No Event General Journal Debit Credit 1 1 Liability—compensated future absences 765,000 Salaries expense 39,030,600 Cash 39,795,600 Explanation: 1. Salaries expense (900 × $850) = $765,000 2. Salaries expense ($39 million + [4% × $765,000]) = $39,030,600 Cash (total) = $39,795,600

Score: 10/10 Points 100 %

5. Award: 1 out of 1.00 point On January 1, 2024, Poplar Fabricators Corporation agreed to grant its employees two weeks of vacation each year, with the stipulation that vacations earned each year can be taken the following year. For the year ended December 31, 2024, Poplar Fabricators’ employees each earned an average of $850 per week. Nine hundred vacation weeks earned in 2024 were not taken during 2024. Required: 1. Prepare the appropriate adjusting entry for vacations earned but not taken in 2024. 2. Suppose that, by the time vacations actually are taken in 2025, salary rates for employees have risen by an average of 4 percent from their 2024 level. Also, assume salaries earned in 2025 (including vacations earned and taken in 2025) were $39 million. Prepare a journal entry that summarizes 2025 salaries and the payment for 2024 vacations taken in 2025.  Required 1 Required 2  Complete this question by entering your answers in the tabs below. Prepare the appropriate adjusting entry for vacations earned but not taken in 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Required 1 Required 2 No Event General Journal Debit Credit 1 1 Salaries expense  765,000  Liability—compensated future absences  765,000  References General Journal Difficulty: 2 Medium Learning Objective: 13-03 Characterize accrued liabilities and liabilities from advance collection and describe when and how they should be recorded. On January 1, 2024, Poplar Fabricators Corporation agreed to grant its employees two weeks of vacation each year, with the stipulation that vacations earned each year can be taken the following year. For the year ended December 31, 2024, Poplar Fabricators’ employees each earned an average of $850 per week. Nine hundred vacation weeks earned in 2024 were not taken during 2024. Required: 1. Prepare the appropriate adjusting entry for vacations earned but not taken in 2024. 2. Suppose that, by the time vacations actually are taken in 2025, salary rates for employees have risen by an average of 4 percent from their 2024 level. Also, assume salaries earned in 2025 (including vacations earned and taken in 2025) were $39 million. Prepare a journal entry that summarizes 2025 salaries and the payment for 2024 vacations taken in 2025.

 Required 1 Required 2  Complete this question by entering your answers in the tabs below. Prepare the appropriate adjusting entry for vacations earned but not taken in 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Required 1 Required 2 No Event General Journal Debit Credit 1 1 Salaries expense 765,000 Liability—compensated future absences 765,000 Explanation: 1. Salaries expense (900 × $850) = $765,000 2. Salaries expense ($39 million + [4% × $765,000]) = $39,030,600 Cash (total) = $39,795,600

Score: 10/10 Points 100 %

4. Award: 1 out of 1.00 point The following selected transactions relate to liabilities of United Insulation Corporation. United’s fiscal year ends on December 31. 2024 January 13 Negotiated a revolving credit agreement with Parish Bank that can be renewed annually upon bank approval. The amount available under the line of credit is $26.0 million at the bank’s prime rate. February 1 Arranged a three-month bank loan of $9.0 million with Parish Bank under the line of credit agreement. Interest at the prime rate of 7% was payable at maturity. May 1 Paid the 7% note at maturity. December 1 Supported by the credit line, issued $13.0 million of commercial paper on a nine-month note. Interest was discounted at issuance at a 6% discount rate. December 31 Recorded any necessary adjusting entry(s). 2025 September 1 Paid the commercial paper at maturity. Required: Prepare the appropriate journal entries through the maturity of each liability. Note: Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.

No Date General Journal Debit Credit 1 January 13, 2024 No journal entry required  2 February 01, 2024 Cash  9,000,000  Notes payable  9,000,000  3 May 01, 2024 Interest expense  157,500  Notes payable  9,000,000  Cash  9,157,500  4 December 01, 2024 Cash  12,415,000  Discount on notes payable  585,000  Notes payable  13,000,000  5 December 31, 2024 Interest expense  65,000  Discount on notes payable  65,000  6 September 01, 202 Interest expense  520,000  Discount on notes payable  520,000  7 September 01, 202 Notes payable  13,000,000  Cash  13,000,000  References General Journal Difficulty: 1 Easy Learning Objective: 13-02 Account for the issuance and payment of various forms of notes and record the interest on the notes. The following selected transactions relate to liabilities of United Insulation Corporation. United’s fiscal year ends on December 31. 2024 January 13 Negotiated a revolving credit agreement with Parish Bank that can be renewed annually upon bank approval. The amount available under the line of credit is $26.0 million at the bank’s prime rate. February 1 Arranged a three-month bank loan of $9.0 million with Parish Bank under the line of credit agreement. Interest at the prime rate of 7% was payable at maturity. May 1 Paid the 7% note at maturity. December 1 Supported by the credit line, issued $13.0 million of commercial paper on a nine-month note. Interest was discounted at issuance at a 6% discount rate. December 31 Recorded any necessary adjusting entry(s).

2025 September 1 Paid the commercial paper at maturity. Required: Prepare the appropriate journal entries through the maturity of each liability. Note: Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars. No Date General Journal Debit Credit 1 January 13, 2024 No journal entry required 2 February 01, 2024 Cash 9,000,000 Notes payable 9,000,000 3 May 01, 2024 Interest expense 157,500 Notes payable 9,000,000 Cash 9,157,500 4 December 01, 2024 Cash 12,415,000 Discount on notes payable 585,000 Notes payable 13,000,000 5 December 31, 2024 Interest expense 65,000 Discount on notes payable 65,000 6 September 01, 2025 Interest expense 520,000 Discount on notes payable 520,000 7 September 01, 2025 Notes payable 13,000,000 Cash 13,000,000 Explanation: 2024 January 13 No entry is made for a line of credit until a loan actually is made. It would be described in a disclosure note. May 1 Interest expense ($9,000,000 × 7% × 3 ÷ 12) = $157,500 Notes payable (face amount) = $9,000,000 Cash ($9,000,000 + $157,500) = $9,157,500 December 1 Cash (difference) = $12,415,000 Discount on notes payable ($13,000,000 × 6% × 9 ÷ 12) = $585,000 Notes payable (face amount) = $13,000,000

December 31 The effective interest rate is 6.2827% ($585,000 ÷ $12,415,000) × 12 ÷ 9. So, properly, interest should be recorded at that rate times the outstanding balance times one-twelfth of a year: Interest expense ($12,415,000 × 6.2827% × 1 ÷ 12) = $65,000 Discount on notes payable = $65,000 However the same results are achieved if interest is recorded at the discount rate times the maturity amount times one-twelfth of a year: Interest expense ($13,000,000 × 6% × 1 ÷ 12) = $65,000 Discount on notes payable = $65,000 2025 September 1 Interest expense ($13,000,000 × 6% × 8 ÷ 12)* = $520,000 Discount on notes payable = $520,000 Notes payable (balance) = $13,000,000 Cash (maturity amount) = $13,000,000 * or, ($12,415,000 × 6.2827% × 8 ÷ 12) = $520,000

Score: 10/10 Points 100 %

3. Award: 1 out of 1.00 point On July 1, 2024, Li-Ma Industries issued nine-month notes in the amount of $400 million. Interest is payable at maturity. Required: Determine the amount of interest expense that should be recorded in a year-end adjusting entry under each of the following independent assumptions: Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10.) Fiscal Year End: Principal (million) × Interest Rate × Time = Interest Expense December 31, 2024 $ 400 × 12 % × 6/12  = $ 24  million September 30, 2024 $ 400 × 10 % × 3/12  = $ 10  million October 31, 2024 $ 400 × 9 % × 4/12  = $ 12  million January 31, 2025 $ 400 × 6 % × 7/12  = $ 14  million rev: 12_16_2022_QC_CS-324260 References Worksheet Difficulty: 1 Easy Learning Objective: 13-02 Account for the issuance and payment of various forms of notes and record the interest on the notes. On July 1, 2024, Li-Ma Industries issued nine-month notes in the amount of $400 million. Interest is payable at maturity. Required: Determine the amount of interest expense that should be recorded in a year-end adjusting entry under each of the following independent assumptions: Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10.) $ $ $ $ $ Fiscal Year End: Principal (million) × Interest Rate × Time = Interest Expense December 31, 2024 400 × 12 % × 6/12 = 24 million September 30, 2024 × 10 % × 3/12 = 10 million October 31, 2024 × 9 % × 4/12 = 12 million January 31, 2025 × 6 % × 7/12 = 14 million $ 400 $ 400 $ 400 F F F rev: 12_16_2022_QC_CS-324260 Explanation: No further explanation details are available for this problem.

Score: 10/10 Points 100 %

2. Award: 1 out of 1.00 point On December 12, 2024, Park Electronics received $24,000 from a customer toward a cash sale of $240,000 of diodes to be completed on January 16, 2025. What journal entries should Park record on December 12 and January 16? Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. No Date General Journal Debit Credit 1 December 12, 202 Cash  24,000  Deferred revenue  24,000  2 January 16, 2025 Cash  216,000  Deferred revenue  24,000  Sales revenue  240,000  References General Journal Difficulty: 1 Easy Learning Objective: 13-03 Characterize accrued liabilities and liabilities from advance collection and describe when and how they should be recorded. On December 12, 2024, Park Electronics received $24,000 from a customer toward a cash sale of $240,000 of diodes to be completed on January 16, 2025. What journal entries should Park record on December 12 and January 16? Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

No Date General Journal Debit Credit 1 December 12, 2024 Cash 24,000 Deferred revenue 24,000 2 January 16, 2025 Cash 216,000 Deferred revenue 24,000 Sales revenue 240,000 Explanation: No further explanation details are available for this problem.

Score: 10/10 Points 100 %

1. Award: 1 out of 1.00 point Wang Corporation issued $12 million of commercial paper on March 1 on a nine-month note. Interest was discounted at issuance at a 9% discount rate. Prepare the journal entry for the issuance of the commercial paper and its repayment at maturity. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars. No Event General Journal Debit Credit 1 1 Cash  11,190,000  Discount on notes payable  810,000  Notes payable  12,000,000  2 2 Interest expense  810,000  Discount on notes payable  810,000  3 3 Notes payable  12,000,000  Cash  12,000,000  References General Journal Difficulty: 1 Easy Learning Objective: 13-02 Account for the issuance and payment of various forms of notes and record the interest on the notes. Wang Corporation issued $12 million of commercial paper on March 1 on a nine-month note. Interest was discounted at issuance at a 9% discount rate. Prepare the journal entry for the issuance of the commercial paper and its repayment at maturity. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.

No Event General Journal Debit Credit 1 1 Cash 11,190,000 Discount on notes payable 810,000 Notes payable 12,000,000 2 2 Interest expense 810,000 Discount on notes payable 810,000 3 3 Notes payable 12,000,000 Cash 12,000,000 Explanation: Notes payable (face amount) = $12,000,000 Discount on notes payable ($12,000,000 × 9% × 9 ÷ 12) = $810,000 Cash (difference) = $11,190,000