a. Sales of $2,300,000 are subject to estimated warranty cost of 5%. The estimat
ID: 2588357 • Letter: A
Question
a.
Sales of $2,300,000 are subject to estimated warranty cost of 5%. The estimated warranty payable at the beginning of the year was $32,000, and warranty payments for the year totaled $54,000.
b.
On September 1,Ten Mile Electronics signed a $65,000 note payable that requires annual payments of
$13,000 plus 7% interest on the unpaid balance each September 2.
c.
Music For You, Inc., a chain of music stores, ordered $135,000 worth of CD players. With its order, Music For You, Inc., sent a check for $135,000 in advance, and Ten Mile shipped $70,000 of the goods.
Ten Miles will ship the remainder of the goods on October 3, 2014.
d.
The September payroll of $220,000 is subject to employee withheld income tax of $30,600 and FICA tax of 7.65%. On September 30, Ten Mile pays employees their take-home pay and accrues all tax amounts.
Requirement:
Report these items on Ten Mile Electronics' balance sheet at September 30, 2014.
Select the statement account and label. Calculate each accounts' balance and the total current liability amount at September 30, 2014.
(Round all amounts to the nearest whole dollar. Leave any unused cells blank.)
Ten Mile Electronics
Balance Sheet (partial)
September 30, 2014
Current liabilities:
Estimated warranty payable
Current portion of long-term note payable
Interest payable
Unearned sales revenue
Estimated warranty payable
FICA tax payable
Total current liabilities
Long-term liabilities:
Note payable
a.
Sales of $2,300,000 are subject to estimated warranty cost of 5%. The estimated warranty payable at the beginning of the year was $32,000, and warranty payments for the year totaled $54,000.
b.
On September 1,Ten Mile Electronics signed a $65,000 note payable that requires annual payments of
$13,000 plus 7% interest on the unpaid balance each September 2.
c.
Music For You, Inc., a chain of music stores, ordered $135,000 worth of CD players. With its order, Music For You, Inc., sent a check for $135,000 in advance, and Ten Mile shipped $70,000 of the goods.
Ten Miles will ship the remainder of the goods on October 3, 2014.
d.
The September payroll of $220,000 is subject to employee withheld income tax of $30,600 and FICA tax of 7.65%. On September 30, Ten Mile pays employees their take-home pay and accrues all tax amounts.
Explanation / Answer
Workings:
Note: Employer will accrue payroll taxes liability equal to deduction from employee's payroll which will also appear as a liability till payment is made and hence the FICA tax payable includes both employer and employee contributions.
Ten Mile Electronics Balance Sheet (partial) September 30, 2014 Current Liabilities: Estimated warranty payable 93000 Current portion of long-term note payable 13000 Interest payable 379 Unearned sales revenue 65000 Income tax withheld 30600 FICA tax payable 16830 Total current liabilities 218809 Long-term liabilities: Note payable ($65000 - $13000) 52000Related Questions
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