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Chapter 13: Question 6BE (page 692)

BE13-6 (L01) Lexington Corporation’s weekly payroll of \(24,000 included FICA taxes withheld of \)1,836, federal taxes with-held of \(2,990, state taxes withheld of \)920, and insurance premiums withheld of $250. Prepare the journal entry to record Lexington’s payroll.

Short Answer

Expert verified

The amount of cash paid for salaries and wages expenses is $18,004.

Step by step solution

01

Meaning of Payroll

The amount of money employees get periodically for the hard work they provide to their employer is known as payroll. Employees get the amount of payroll after withholding various statutory taxes.

02

Journal Entries

Date

Accounts and Explanation

Debit $

Credit $

Salaries and Wages Expenses

$24,000

FICA Taxes Withheld

$1,836

Federal Taxes With-held

$2,990

State taxes Withheld

$920

Insurance Premium Withheld

$250

Cash

$18,004

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Most popular questions from this chapter

How are the terms “probable,” “reasonably possible,” and “remote” related to contingent liabilities?

(Gain on Sale of Investments and Comprehensive Income) On January 1, 2017, Acker Inc. had the followingbalance sheet.

The accumulated other comprehensive income related to unrealized holding gains on available-for-sale debt securities. The fairvalue of Acker Inc.’s available-for-sale debt securities at December 31, 2017, was \(190,000; its cost was \)140,000. No securities

were purchased during the year. Acker Inc.’s income statement for 2017 was as follows. (Ignore income taxes.)

ACKER INC.

BALANCE SHEET

AS OF JANUARY 1, 2017

Assets Equity

Cash \( 50,000 Common stock \)260,000

Debt investments (available-for-sale) 240,000 Accumulated other comprehensive income 30,000

Total \(290,000 Total \)290,000

ACKER INC.

INCOME STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 2017

Dividend revenue \( 5,000

Gain on sale of investments 30,000

Net income \)35,000

Instructions

(Assume all transactions during the year were for cash.)

(a) Prepare the journal entry to record the sale of the available-for-sale debt securities in 2017.

(b) Prepare the journal entry to record the Unrealized Holding Gain or Loss for 2017.

(c) Prepare a statement of comprehensive income for 2017.

(d) Prepare a balance sheet as of December 31, 2017.

BE13-3 (L01) Takemoto Corporation borrowed \(60,000 on November 1, 2017, by signing a \)61,350, 3-month, zero-interest bearing note. Prepare Takemoto’s November 1, 2017, entry; the December 31, 2017, annual adjusting entry; and the February 1, 2018, entry.

Question: What evidence is necessary to demonstrate the ability to defer settlement of short-term debt?

On December 21, 2017, Zurich Company provided you with the following information regarding its trading investments.

December 31, 2017

Investments (Trading) Cost Fair Value Unrealized Gain (Loss)

Stargate Corp. shares \(20,000 \)19,000 \((1,000)

Carolina Co. shares 10,000 9,000 1000

Vectorman Co. shares 20,000 20,600 600

Total of portfolio \)50,000 \(48,600 \)(1,400)

Previous fair value adjustment balance-0-

Fair value adjustment-Cr. \((1,400)

During 2018, Carolina Co. shares were sold for \)9,500. The fair value of the shares on December 31, 2018, was Stargate Corp.

shares-\(19,300: Vectorman Co. shares-\)20,500

Instructions

(a) Prepare the adjusting journal entry needed on December 31, 2017.

(b) Prepare the journal entry to record the sale of the Carolina Co. shares during 2018.

(c) Prepare the adjusting journal entry needed on December 31, 2018.

See all solutions

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