Apply It: Chapter 10 Current Liabilities and Payroll

Apply It: Chapter 10 Current Liabilities and Payroll

Directions: Be sure to read the following requirements for this assignment and address each of the stated criteria. There are four (4) questions total.

Peters Mini Putt was opened on March 1 by Peter Palazzi. The following selected transactions occurred during March:

Mar. 1 Purchased golf balls and other supplies for $350 from Stevenson Supplies payable in

30 days.

Mar. 5 Received a booking for a birthday party to be held the following week. The customer

paid the mini golf fees of $200 in advance.

Mar. 12 Provided the golf services for the birthday party.

Mar. 15 Wages were paid to hourly workers. A total of $5,000 was earned, with withholdings

as follows: CPP $230, EI $94, and income tax $1,400.

Mar. 30 Wrote a cheque to Stevenson Supplies for the $350 owing to settle the balance due.

Instructions: Journalize the transactions. (26 points)

GENERAL JOURNAL

Date Account Titles and Explanation Ref. Debit Credit

Mar. 1 GENERAL JOURNAL

Date Account Titles and Explanation Ref. Debit Credit

Mar. 5 GENERAL JOURNAL

Date Account Titles and Explanation Ref. Debit Credit

Mar. 12 GENERAL JOURNAL

Date Account Titles and Explanation Ref. Debit Credit

Mar. 15 GENERAL JOURNAL

Date Account Titles and Explanation Ref. Debit Credit

Mar. 30

Scoggin rings up sales plus sales taxes on its cash register. On April 10, the register total for sales is $80,000.

Instructions: Journalize the transactions assuming the sales were made in

Quebec (GST @ 5%; QST @ 9.975%),

Nova Scotia (HST @ 15%), and

Alberta (GST @ 5%).

points)

a. Quebec

GENERAL JOURNAL

Date Account Titles and Explanation Ref. Debit Credit

b. Nova Scotia

GENERAL JOURNAL

Date Account Titles and Explanation Ref. Debit Credit

c. Alberta

GENERAL JOURNAL

Date Account Titles and Explanation Ref. Debit Credit

Ahmad Company has the following data for the weekly payroll ended May 31:

Employees are paid 1.5 times the regular hourly rate for all hours worked over 40 hours per week.

Ahmad Company must make payments to the workers compensation plan equal to 2% of the gross

payroll. In addition, Ahmad matches the employees health insurance contributions and accrues

vacation pay at a rate of 4%. (51 points total)

Hours Worked Hourly Rate CPP Deduction Income Tax Withheld Health Insurance

Employee M T W Th F S A. Kassam 9 8 9 8 10 3 $13 $29.17 $81.25 $10

H. Faas8 8 8 8 8 5 14 29.59 83.90 15

G. Labute 9 10 9 10 8 0 15 33.05 98.85 15

Instructions

a. Prepare the payroll register for the weekly payroll. Calculate each employees EI deduction at a rate of 1.66% of gross pay. (39 points)

Gross Earnings Deductions Net pay

Employee Total Houts Reg.

Pay Overtime

Pay Gross Pay CPP EI Income Tax Health Insurance Total A. Kassa H. FaasG. Labute Totals b. Record the payroll and Ahmad Companys employee benefits. (12 points)

GENERAL JOURNAL

Date Account Titles and Explanation Ref. Debit Credit

Medlen Models has the following account balances at December 31, 2021:

Notes payable ($60,000 due after 12/31/22) $100,000

Unearned service revenue 70,000

Mortgage payable ($90,000 due in 2022) 250,000

Salaries payable 32,000

Accounts payable 63,000

In addition, Medlen is involved in a lawsuit. Legal counsel feels it is probable Medlen will pay

damages of $25,000 in 2022. Medlen records contingent liabilities in the account Litigation Liability.

Instructions: Prepare the current liabilities section of Medlens December 31, 2021, balance sheet. (7 points)

Apply It: Chapter 9 Long-Lived Assets

Directions: Be sure to read the following requirements for this assignment and address each of the stated criteria. There are six (6) questions total.

The following costs were incurred by Shumway Company in purchasing land: cash price, $85,000; legal fees, $1,500; removal of old building, $5,000; clearing and grading, $3,500; installation of a parking lot, $5,000. (3 points)

What is the cost of the land?

What is the cost of the land improvements?

right225425Answers:

020000Answers:

Surkis Company incurs the following costs in purchasing equipment: invoice price, $40,375; shipping, $625; installation and testing, $1,000; one-year insurance policy, $1,750.

What is the cost of the equipment? (2 points)

0236220Answer:

020000Answer:

In the space provided, use the dropdowns to indicate whether each of the following items is an operating expenditure (O) or a capital expenditure (C). (10 points)

a. Repaired building roof, $1,500 Selectb. Replaced building roof, $27,500 Selectc. Purchased building, $480,000 Selectd. Paid insurance on equipment in transit, $550 Selecte. Purchased supplies, $350Note: the assumption is that the supplies are to be used in the near future. Supplies are not long-lived assets. Selectf. Purchased truck, $55,000 Selectg. Purchased oil and gas for truck, $125 Selecth. Rebuilt engine on truck, $5,000 Selecti. Added new wing to building, $250,000 Selectj. Painted interior of building, $1,500 SelectKarsch Enterprises has a December 31 fiscal year end and uses straight-line amortization to the nearest month for its finite-life intangible assets. The company has provided you with the following information related to its intangible assets and goodwill during 2020 and 2021:

2020

Jan. 9 - Purchased a patent with an estimated useful life of five years and a legal life of 20 years for $45,000 cash.

May 15 - Purchased by another company and recorded goodwill of $450,000 as part of the purchase.

Dec. 31 - Recorded adjusting entries as required for amortization.

Dec. 31 - Tested assets for impairment and determined the patent and the goodwills recovery.

amounts were $40,000 and $400,000, respectively.

2021

Jan. 2 - Incurred legal fees of $30,000 to successfully defend the patent.

Mar. 31 - Incurred research costs of $175,000.

Apr. 1 - Purchased a copyright for $66,000 cash. The company expects the copyright will benefit the company for 10 years.

July 1 - Purchased a trademark with an indefinite expected life for $275,000 cash.

Dec. 31 - Recorded adjusting entries as required for amortization.

Instructions

Record the transactions and adjusting entries as required in the General Journals below.

(38 points)

Show the balance sheet presentation of the intangible assets and goodwill at December 31, 2021.

(3 points)

Record the transactions and adjusting entries as required.

GENERAL JOURNAL

Date Account Titles and Explanation Ref. Debit Credit

GENERAL JOURNAL

Date Account Titles and Explanation Ref. Debit Credit

GENERAL JOURNAL

Date Account Titles and Explanation Ref. Debit Credit

GENERAL JOURNAL

Date Account Titles and Explanation Ref. Debit Credit

GENERAL JOURNAL

Date Account Titles and Explanation Ref. Debit Credit

GENERAL JOURNAL

Date Account Titles and Explanation Ref. Debit Credit

GENERAL JOURNAL

Date Account Titles and Explanation Ref. Debit Credit

GENERAL JOURNAL

Date Account Titles and Explanation Ref. Debit Credit

GENERAL JOURNAL

Date Account Titles and Explanation Ref. Debit Credit

Balance Sheet of Intangible Assets

Assets

Rainbow Company purchased land, a building, and equipment on January 2, 2021, for $850,000. The company paid $170,000 cash and signed a mortgage note payable for the remainder.

Managements best estimate of the value of the land was $352,000; of the building, $396,000; and of the equipment, $132,000.

Record the purchase. Do not round intermediate calculations for the percentage allocation between the assets. (10 points)

GENERAL JOURNAL

Date Account Titles and Explanation Ref. Debit Credit

Surkis Company acquires equipment at a cost of $42,000 on January 3, 2021. Management estimates the equipment will have a residual value of $6,000 at the end of its four-year useful life.

Assume the company uses the straight-line method of depreciation. Calculate the depreciation expense for each year of the equipments life. Surkis has a December 31 fiscal year end. (4 points)

0226695Answer:

020000Answer: