Question

12. Comfort realty had the following selected transactions: Feb 1 signs a $50,0000, 6-month, 9% interest-bearing note payable to Citibank and receives $50,000 in cash, cash register sales total $43,200, which includes an 8% sales tax the payroll for the month consists of sales salaries $32,000 and office salaries $18,000. All wages are subject to 8% FICA taxes. A total of $8,900 federal income taxes are withheld. The salaries are paid on March 1 28 the company develops the following adjustment data 1) Interest expense of $375 has been incurred on the note 2) Employer payroll taxes include 8% FICA taxes, a 5.4% state unemployment tax, and a 0.8% federal unemployment tax 3) Some sales were made under warranty. Of the units sold under warranty, 350 are expected to become defective. Repair costs are estimated to be 40% per unit a. Journalize the February transactions b. Journalize the adjusting entries at February 28

Answer 1

Date	Account	Debit	Credit
Feb.1	Cash	50,000
	Note payable		50,000
	Cash	43,200
	Sales revenue		40,000
	Sales tax payable		3,200
	Salaries expense	50,000
	Salaries payable		37,100
	FICA payable		4,000
	Federal income tax payable		8,900
Adj. 1	Interest expense	375
	Interest payable		375
Adj.2	Payroll tax expense	7,100
	FICA taxes payable		4,000
	State unemployment tax payable		2,700
	Federal unemployment tax payable		400