Question

In: Accounting

1) If a notes payable is reclassified from a long-term liability to a short-term liability, then...

1) If a notes payable is reclassified from a long-term liability to a short-term liability, then

A	The amount of total liabilities stays the same
B	The total liabilities increase
C	Current liabilities decrease
D	Long-term liabilities decrease

2) On October 1, 2025, Conway, Inc. borrowed $300,000 by signing a nine-month, 6% note payable. Interest was accrued on December 31, 2025. What is the journal entry on July 1, 2026, the date the note was paid?

3) Jackson Company pays the collected sales tax of $700 to the state. The journal entry would be:

4) Angie's gross pay for the week is $980. Her deduction for federal income tax is based on a rate of 20%. She has voluntary deduction of $240. Her year-to-date pay is under the limit for OASDI. What is the amount of FICA-Medicare Tax deducted from her pay? (Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%. Do not round any intermediate calculations, and round your final answer to the nearest cent.)

A	$60.76
B	$196.00
C	$270.97
D	$14.21

5) On November 1, 2025 Ashton, Inc. purchased merchandise inventory for $35,000 by signing a note payable. The note is for 6 months and bears interest at a rate of 8%. The journal entry for the purchase of the merchandise using a perpetual inventory system would be:

Expert Solution

1. (A) The total liabilities will remain same.

When we reclassify the notes payble from long-term to short-term, the total liabilities will remain the same; only the current and long-term liabilities will change. The current liabilities will increase with the amount of the notes liability and the long-term liabilities will decrease with the same amount. hence, there will be no change in the total liabilities.

2. Journal Entry:-

3. Journal Entry

4. FICA Medicare Tax

FICA Medicare tax is calculated by multiplying gross pay with the FICA medicare tax rate. No deductions are made to the gross pay while calculating the medicare tax rate.

hence, calculate FICA Medicare Tax by multiplying the gross pay of $980 with the FICA medicare tax rate of 1.45%.

=> $980 x 1.45% = $14.21

Therefore, FICA Medicare Tax = $14.21

5. Journal Entry

Hope this solves your query. Feel free to ask any further query in the comment section.

ekkarill92 answered 1 year ago

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