Question

	Amazon had the following transactions during the year:
1	Jan 1, Borrows $90,000 from the bank and signs a 6 month note, 8% interest
2	Feb 1, Amazon does not separate sales and sales tax. Records the january sales
	of $23,540, which includes a 7% sales tax
3	April 1, Borrows $40,000 from a bank signing a 3 month note, 8% interest
4	July 1, pays off the $90,000 note and the applicable interest
5	July 1, pays off the $40,000 note and the applicable interest
6	December 31, records payroll for the year. Gross payroll is $90,000,
	FICA is 7.65%, Federal Witholding tax is 20%, State witholding tax is 3%,
	FUI is .7%, SUI is 5.4%. (Journalize the payroll to employees as well as the employers
	portion that needs to be paid) All wages are subject to FICA and unemployment taxes
	Prepare the journal entries for the above transactions

Answer 1

Answers :-

Date	Account title and Explanatins	Debit	Credit
Jan 1	Cash a/c Dr	$90,000	-------------
-------	Notes payable a/c Cr		$90,000
- - -	(To record borrowing from the bank )
Feb 1	Cash a/c Dr	$23,540
- - -	Sales revenue a/c Cr ($23,540× 100/107)		$22,000
- - -	Sales tax payable a/c Cr ($23,540× 7/107)		$1,540
- - -	(To record sale for cash)	----	----
Apl 1	Cash a/c Dr	$40,000	-------------
-------	Notes payable a/c Cr	------	$40,000
- - -	(To record borrowing from the bank )
Jul 1	Notes payable a/c Dr	$90,000
----	Interest Expense a/c Dr($90,000 × 8% × 6/12)	$3,600
----	Cash a/c Cr		$93,600
	(Pay off $90,000 bond with interest)
Jul 1	Notes payable a/c Dr	$40,000
----	Interest Expense a/c Dr ($40,000× 8% × 3/12)	$800
----	Cash a/c Cr		$40,800
	(Pay off $40,000 bond with interest)
Dec 31	Salaries & Wages Expense a/c Dr	$1,23,075
- - -	Gross payroll a/c Cr		$90,000
- - -	FICA a/c Cr ($90,000 × 7.65%)		$6,885
- - -	Federal withholding Tax a/c Cr ($90,000 × 20%)		$18,000
- - -	State withholding Tax a/c Cr ($90,000 × 3%)		$2,700
- - -	FUI a/c Cr ($90,000 × 0.70%)		$630
- - -	SUI a/c Cr ($90,000 × 5.40%)		$4,860
- - -	(To record Wages and saleries)	----	----
Dec 31	Payroll Taxes Expense a/c Dr	$20,700
- - -	Federal withholding Tax a/c Cr ($90,000 × 20%)		$18,000
- - -	State withholding Tax a/c Cr ($90,000 × 3%)		$2,700
	(To record Employee payroll Taxes)