Question

Kent Enterprises had the following transactions relating to year-end liabilities (assume a December 31 year-end):

1. The company borrowed $50,000 on August The note was for one-year and the interest rate was 5.50%
2. The company recorded December sales of $24,675. The sales tax rate was 8.25%.
3. The company received $18,000 on November 1 in advance of performing the service. The service was to be performed evenly over the next 12 months.
4. The company recorded sales of $412,095. Warranty claims are estimated at 1.5% of sales. To date warranty claims of $4,725 have been paid for the year. The beginning balance in the warranty payable account was $3,500.

Required

1.         How much interest is owed on December 31? What is the total amount to be paid on August 1 when the note is due?

2.         What is the amount of sales tax owed on the sale? What is the total that the customer will pay?

3.         How much of the $18,000 would be earned as of December 31? How much is still unearned as of December 31?

4.         What is the warranty expense for the year? What is the ending balance in the warranty payable account?

Answers

Questions	Answers
1. Interest Owed on 12-31
1. Total Amount Paid on Note
2. Sales Tax Owed
2. Total Amount That Customer Will Pay
3. Amount Earned
3. Amount Owed at Year-End
4. Warranty Expense
4. Ending Balance in Warranty Payable

Quiz Company is preparing the payroll report and wants to look at one particular employee. The following data is available for a recent week:

Hours Worked: 60

Hourly Pay Rate: $20.00

Federal Withholding: 25%

FICA Withholding: 6.20%

Medicare Withholding: 1.45%

Illinois Withholding: 5%

401-K Deduction: 5% (employer matches)

Federal and State Unemployment: 6%

Required

• Calculate the gross pay
• Calculate the net pay
• Calculate the total cost to the employer
• Calculate the % of total cost to gross pay for the employer

Regular Pay (40 hours)
Overtime Pay
Gross Pay
Federal Withholding
FICA Withholding
Medicare Withholding
Illinois Withholding
401-K Deduction
Net Pay
Gross Pay
FICA
Medicare
401-K
Unemployment Tax
Total Compensation Expense
% of Total to Gross Pay

Answer 1

1	Interest owed on 12-31=Interest expense from August 1 to Dec 31 (5 months)=50000*5.5%*5/12=$ 1145.833=$ 1146
	Total Amount Paid on Note:
					$
	Principal				50000
	Interest for 1 year		(50000*5.5%)		2750
	Total				52750
2	Sales Tax Owed=Sales*Tax rate=24675*8.25%=$ 2035.688=$ 2036
	Total Amount That Customer Will Pay=Sales amount+Sales tax owed=24675+2036=$ 26711
3	Amount Earned as on 12-31=Amount earned in Nov and Dec (For 2 months)=18000*(2/12)=$ 3000
	Amount Owed at Year-End=Advance received-Amount earned=18000-3000=$ 15000
4	Warranty Expense=Sales*1.5%=412095*1.5%=$ 6181.425=$ 6182
	Ending Balance in Warranty Payable:
					$
	Beginning balance				3500
	Add: Warranty expense				6182
					9682
	Less:Warranty claims paid				4725
	Ending balance				4957