Reference no: EM132543184
Questions -
Q1 - Megan's Products is undecided about which basis to use in estimating uncollectible accounts. On December 31, 2020, the balance in Accounts Receivable was $308,000 and net credit sales amounted to $2,700,000 during 2020. An aging analysis of the accounts receivable indicated that $31,000 in accounts are expected to be uncollectible. Past experience has shown that about 1% of net credit sales eventually are uncollectible.
Prepare the adjusting entries to record estimated bad debt expense using the (1) percentage of sales basis and (2) the percentage of receivables basis under each of the following independent assumptions:
Q2 - Ermler Company purchased a machine at a cost of $80,000. The machine is expected to have a $5,000 salvage value at the end of its 5-year useful life.
Compute annual depreciation for the first and second years using the Straight-line method.
Q3 - Iverson Company purchased a delivery truck for $45,000 on January 1, 2020. The truck was assigned an estimated useful life of 100,000 miles and has a residual value of $10,000. The truck was driven 18,000 miles in 2020 and 22,000 miles in 2021. Compute depreciation expense using the units-of-activity method for the years 2020 and 2021.
Q4 - Carey Enterprises sold equipment on January 1, 2020 for $10,000. The equipment had cost $48,000. The balance in Accumulated Depreciation at January 1 is $40,000. What entry would Carey make to record the sale of the equipment?
Q5 - Ada Marion earns a salary of $7,500 per month during the year. FICA taxes are 7.65% on the first $127,200 of gross earnings. Federal unemployment insurance taxes are 6.2% of the first $7,000; however, a credit is allowed equal to the state unemployment insurance taxes of 5.4% on the $7,000. During the year, $25,600 was withheld for federal income taxes and $5,700 was withheld for state income taxes.
(a) Journal entry summarizing the payment of Ada's total salary during the year.
(b) Journal entry summarizing the employer payroll tax expense on Ada's salary for the year.
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