Question

1. Assume you own a company with 50 employees – all salaried – earn on average 60,000/year. What are the company’s full costs associated with payroll. Assume the company pays the base rate for State Unemployment Tax and therefore gets the full deduction on Federal Unemployment Tax.

2. On October 12, 2011, Kern Company arranged with a supplier to replace its overdue $10,000 accounts payable by paying $2,500 in cash and signing a note for the remainder. The note matures in 90 days and has a 12% interest rate. Prepare the entries for October 12, December 31 and when the note matures.

3. Sally Bline works for Kern Company. For the pay period ended November 30, her gross earnings are $3,000. Bline has $800 deducted for federal income taxes and $200 for state income taxes from each paycheck. Additionally, a $35 premium for health insurance and a $10 donation to the united Way are deducted. Bline pays FICA Social Security taxes at 6.2% and Medicare taxes at 1.45%. She has not earned enough this year to be exempt from any FICA taxes.  Journalize the accrual of salaries expense of Bline’s wages by Kern Company.

4. On November 1, Kern borrows $5,000 cash from a bank in return for a 60-day, 12% note. Record the note’s issuance on November 1 and its repayment with interest on December 31.

5. On 8/12, Kern sold materials for $6,000 cash that are subject to a 5% state income tax.  The cost of the goods sold was $4,400.  On 8/31, Kern remitted the tax to the state taxing authority. Journalize both entries.

Answer 1

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