ACC 226 wk 3 Exercise 11-1 Exercise 11-7

ACC 226 wk 3 Exercise 11-1 Exercise 11-7 

ACC 226 wk 3 E 11-1 E 11-7 

CheckPoint: Classifying Liabilities and Preparing Payroll Entries

Resource: Fundamental Accounting Principles, pp. 451 and 452 

Exercise 11-1

The following items appear on the balance sheet of a company with a two-month operating cycle. Identify the proper classification of each item as follows: C if it is a current liability, L if it is a long-term liability or N if it is not a liability.

         1. Sales taxes payable.                       6. Notes payable (due in 6 to 12 months).

         2. FUTA taxes payable.                                 7. Notes payable (due in 120 days).

          3. Accounts receivable.                                8. Current portion of long-term debt.

          4. Accrued payroll payable.              9. Notes payable (mature in five years).

         5. Wages payable.                             10. Notes payable (due in 13 to 24 months)

Exercise 11-7

Using the data in situation a of exercise below, prepare the employer’s September 30 journal entries to record (1) salary expense and its related payroll liabilities for this employee and (2) the employer’s payroll taxes expense and its related liabilities. The employee’s federal income taxes withheld by the employer are $135 for this pay period.

                                               Tax                                   Rate           Applied To

                                FICA—Social Security . . . . . . .     6.20%        First $87,000

                                FICA—Medicare . . . . . . . . . . .      1.45           All gross pay

                                FUTA . . . . . . . . . . . . . . . . . . .        0.80           First $7,000

                                SUTA . . . . . . . . . . . . . . . . . . .        2.90           First $7,000 

                                                          Gross Pay          Gross Pay for

                                                      Through August       September

                                                    a.     $ 6,400                      $ 800