Question

3. Vincent Sanders works for Peterson Company all year and earns a monthly salary of $3,000. There is no overtime pay. Based on Vincent's W-4, Peterson withholds income taxes at 10% of his gross pay. As of July 31, Vincent had $21,000 of cumulative earnings. (Click the icon to view payroll tax rate information.) Journalize the accrual of salary expense for Peterson Company related to the employment of Vincent Sanders for the month of August. (Record debits first, then credits. Round all amounts to the nearest cent. Select the explanation on the last line of the journal entry table.) Date Accounts and Explanation Credit Debit Cash Employee Health Insurance Payable Employee Income Taxes Payable FICA-Medicare Taxes Payable FICA-OASDI Taxes Payable Payroll Tax Expense Salaries Expense Salaries Payable United Way Payable

Answer 1

Journal Entry:

Date	Accounts and Explanation	Debit	Credit
	Salaries Expense	$3,000
	Federal Income Tax Withheld Payable ($3,000*10/100)		$300.0
	FICA - OASDI Taxes Payable ($3,000*6.2/100)		$186.0
	FICA - Medicare Taxes Payable ($3,000*1.45/100)		$43.50
	Salaries Payable ($3,000 - $300 - $186 - $43.50)		$2,470.50
	(To record the accrual salary expense)

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The correct answer is c) $139,754

Supporting calculations:

Purchase cost of the mine with 36,000 tons	$519,000
Cost per ton of the mine ($519,000/36,000 tons)	$14.42
Cost of tons sold in 2018 (16,500 tons * $14.42)	$237,930
Cost of tons sold in 2019 (9,800 tons * $14.42)	$141,316
Total Cost of tons sold	$379,246
Book value of the mine at the end of 2019 ($519,000 - $379,246)	$139,754