1. The company provides a money- back guarantee on its product. The product sells for $200 and the company estimates that 150 units of product sold this accounting period will be returned. Make the adjusting journal entry to record this expense.
A. Warranty Payable 60,000; Warranty Expense 60,000.
B. Warranty Expense 60,000; Warranty Expense 60,000.
C. Warranty Payable 30,000; Warranty Expense 30,000.
D. Warranty Expense 30,000; Warranty Payable 30,000.
The following payroll information is available.
Employee worked 40 hours at a rate $20 an hour.
Social Security tax rate is 6% on the first $117,000 of wages.
Medicare care tax rate is 1.5%
Federal income taxes of $120 should be withheld.
State unemployment tax rate is 3%. Federal unemployment tax is .8%.
Unemployment taxes are paid on $7,000 of each employee's wages.
The employee has earned $5,000 so far this year; therefore, all taxes should be calculated on the employee's earnings for this pay period.
2. Calculate the Social Security tax.
A. 90
B. 53
C. 48
D. 36
3. Calculate the Medicare tax.
A. 15
B. 9
C. 12
D. 11
4. What is the amount of the wage expense?
A. 700
B. 600
C. 800
D. 750
5. What is the amount of the State unemployment tax?
A. 24
B. 40
C. 30
D. 45
6. What is the amount of the Federal unemployment tax?
A. 4.00
B. 1.50
C. 12.5
D. 6.40
7. What is the amount of the payroll tax expense?
A. 46.50
B. 62.00
C. 90.40
D. 25.00
Homework Answers
1) D. Warranty Expense 30,000; Warranty Payable 30,000
Warranty Expenses = $ 150 * 200 = $ 30,000
2) C) $ 48
Social Security Tax = ($ 20 * 40) * 6% = $ 48
3) C) $ 12
Medicare Tax = $ 800 * 1.5% = $ 12
4) C) $ 800
Wages Expense = $ 20 * 40 = $ 800
5) A) $ 24
State Unemployment Tax = $ 800 * 3% = $ 24
6) D) $ 6.4
Federal Unemployment Tax = $ 800 * 0.8% = $ 6.4
7) C) $ 90.40
Payroll Tax Expense = $ 48 + $ 12 + $ 24 + $ 6.4 = $ 90.40
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