HANDOUT PROBLEM for CURRENT LIABILITIES I. Prepare journal entries for the following transactions which took place in 2021. Sold various products for $180,000 on account. The products cost $85,000. Sales a. tax in your area is 8%. Your company uses a periodic inventory system. Your sales in part "a" included an offer for cash rebates of 2% of the $180,000 total sales price if the customer answers a short five-question internet survey. b. с. On November 1, 2021, your company collected $12,000 of rent on your extra office. The rent covers the six-month period from November 1, 2021 through April 30, 2022. Recorded $62,000 of wages earned by employees including $9,000 of d. withholding taxes, $4,000 of FICA taxes, and $2,800 of health insurance benefits. There were no other deductions from the employees' paychecks. e. Recorded EMPLOYER taxes on the wages in "a." Unemployment is a total of 3% of the gross earnings. f. On December 1, 2021, your company received notice that you were being sued for $90,000. g. December 31, 2021, adjusting entries: 1. Accrued wages of $763. Do not accrue additional payroll taxes. 2. Adjusted for the rent in part "c." Estimated that 10% of the customers in part "b." will answer the survey 3. and claim the cash rebate. 4. The lawsuit in "f" is still in progress and your lawyers have advised you that you will probably lose but the lawyers have reasonably estimated that they can settle the case for $50,000. Prepare a list of the current liabilities (account titles and amount still owed) from the above transactions which should be reported on the balance sheet on December 31, 2021.
HANDOUT PROBLEM for CURRENT LIABILITIES I. Prepare journal entries for the following transactions which took place in 2021. Sold various products for $180,000 on account. The products cost $85,000. Sales a. tax in your area is 8%. Your company uses a periodic inventory system. Your sales in part "a" included an offer for cash rebates of 2% of the $180,000 total sales price if the customer answers a short five-question internet survey. b. с. On November 1, 2021, your company collected $12,000 of rent on your extra office. The rent covers the six-month period from November 1, 2021 through April 30, 2022. Recorded $62,000 of wages earned by employees including $9,000 of d. withholding taxes, $4,000 of FICA taxes, and $2,800 of health insurance benefits. There were no other deductions from the employees' paychecks. e. Recorded EMPLOYER taxes on the wages in "a." Unemployment is a total of 3% of the gross earnings. f. On December 1, 2021, your company received notice that you were being sued for $90,000. g. December 31, 2021, adjusting entries: 1. Accrued wages of $763. Do not accrue additional payroll taxes. 2. Adjusted for the rent in part "c." Estimated that 10% of the customers in part "b." will answer the survey 3. and claim the cash rebate. 4. The lawsuit in "f" is still in progress and your lawyers have advised you that you will probably lose but the lawyers have reasonably estimated that they can settle the case for $50,000. Prepare a list of the current liabilities (account titles and amount still owed) from the above transactions which should be reported on the balance sheet on December 31, 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:HANDOUT PROBLEM for CURRENT LIABILITIES
I.
Prepare journal entries for the following transactions which took place in 2021.
Sold various products for $180,000 on account. The products cost $85,000. Sales
a.
tax in your area is 8%. Your company uses a periodic inventory system.
Your sales in part "a" included an offer for cash rebates of 2% of the $180,000
total sales price if the customer answers a short five-question internet survey.
b.
с.
On November 1, 2021, your company collected $12,000 of rent on your extra
office. The rent covers the six-month period from November 1, 2021 through
April 30, 2022.
Recorded $62,000 of wages earned by employees including $9,000 of
d.
withholding taxes, $4,000 of FICA taxes, and $2,800 of health insurance benefits.
There were no other deductions from the employees' paychecks.
e.
Recorded EMPLOYER taxes on the wages in "a." Unemployment is a total of
3% of the gross earnings.
f.
On December 1, 2021, your company received notice that you were being sued
for $90,000.
g.
December 31, 2021, adjusting entries:
1.
Accrued wages of $763. Do not accrue additional payroll taxes.
2.
Adjusted for the rent in part "c."
Estimated that 10% of the customers in part "b." will answer the survey
3.
and claim the cash rebate.
4.
The lawsuit in "f" is still in progress and your lawyers have advised you that
you will probably lose but the lawyers have reasonably estimated that they
can settle the case for $50,000.
Prepare a list of the current liabilities (account titles and amount still owed) from the
above transactions which should be reported on the balance sheet on December 31, 2021.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education