Recording Various LiabilitiesGrove Hardware had the following transactions that produced liabilities during the year:Purchased merchandise on credit for $50,000. (Note: Assume a periodic inventory system.)Year-end wages of $22,000 were incurred, but not paid. Related federal income taxes of $2,200, Social Security of $1,364 (employee portion), and Medicare taxes of $320 were withheld from employees.Year-end estimated income taxes payable, but unpaid, for the year were $37,350.Sold merchandise on account for $2,160, including state sales taxes of $90. (Note: Assume a periodic inventory system.)Employer’s share of Social Security and Medicare taxes for the period were $1,364 and $320, respectively.Borrowed cash under a 120-day, 7%, $20,000 note.Required:Prepare the entry to record each of these transactions (treat each transaction independently). If an amount box does not require an entry, leave it blank.

Journal is the initial step in recording the financial transaction, date wise as per the dual entity…

Answered: Recording Various Liabilities Grove…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Recording Various Liabilities

Grove Hardware had the following transactions that produced liabilities during the year:

Purchased merchandise on credit for $50,000. (Note: Assume a periodic inventory system.)
Year-end wages of $22,000 were incurred, but not paid. Related federal income taxes of $2,200, Social Security of $1,364 (employee portion), and Medicare taxes of $320 were withheld from employees.
Year-end estimated income taxes payable, but unpaid, for the year were $37,350.
Sold merchandise on account for $2,160, including state sales taxes of $90. (Note: Assume a periodic inventory system.)
Employer’s share of Social Security and Medicare taxes for the period were $1,364 and $320, respectively.
Borrowed cash under a 120-day, 7%, $20,000 note.

Required:

Prepare the entry to record each of these transactions (treat each transaction independently). If an amount box does not require an entry, leave it blank.

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