Mest Company has 9 employees. FICA Social Security taxes are 6.2% of the first $118,500 paid to each employee, and FICA Medicare
taxes are 1.45% of gross pay. FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000 paid to each employee. Cumulative pay for the current year for each of its employees follows.
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Answer
The answer and procedures of the exercise are attached in the following archives.
Explanation
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Answer:
Explanation:
Answer:
On Dec 31, 2012 Lee's liability would be $9,500 (principal amount) and $38 (accrued interest)
Explanation:
Lees notes:
Dec. 13 Accepted a $9,500, 45-day, 8% note dated December 13 in granting Miranda Lee a time extension on her past-due account receivable.
First interest due = $9,500 x 8% x 45/360 = $95
On the 31st 18 days would have accrued of the 45days = 18/45 x $95 = $38
On Dec 31, 2012 Lee's liability would be $9,500 (principal amount) and $38 (accrued interest)
Debit Miranda Lee with $9,538
Credit interest on Receivables $38
Credit Account receivables account with $9,500
When the full interest became due we will pass an additional entry:
Dr. Lee with $58
Cr. Interest on receivables with $58
(Being the balance interest on receivables due )
On Jan 27 when Lee paid her interest and principal amount, we will:
Debit Account receivables with $9,500
Debit interest on receivables Account with $95
Credit Tomas account with $9,595
( being liquidation of Lee's indebtedness)
Tomas notes:
Mar 3, Accepted a $5,000, 10%, 90-day note dated March 3 in granting a time extension on the past-due account receivable of Tomas Company.
Let's recognize the full interest due first:
$5,000 x 10% x 90/360 = $125
At this time we will:
Debit Tomas with $5,125
Credit interest on receivables with $125
Credit Account Receivables account with $5,000
On June 1 when Tomas paid his interest and principal amount, we will:
Debit Accounts receivable with $5,000
Debit interest on receivables with $125
Credit Tomas account with $5,125
( being liquidation of Tomas indebtedness)
Hiroshi Cheng notes:
Accepted a $2,000, 30-day, 9% note dated March 17 in granting Hiroshi Cheng a time extension on his past-due account receivable.
Interest = $2,000 x 9% x 30/360 = $15
The entries recognizing this liability will be to :
Debit Cheng Account with $2,015
Credit interest on receivables with $15
Credit Accounts receivable with $2,000
(Being receivables payable balance and interest on balance owed by Cheng)
However Cheng failed in paying up. It was decided to write off the debt.
The entries would be:
Dr. Accounts receivables $2,000
Dr. Interest on Accounts receivables with $15
Cr. Cheng's Account with $2,015
(Being debt owed by Cheng written off)
