Reference no: EM132983562

Questions -

Q1. The following monthly data are taken from Ramirez Company at July 31: Sales salaries, $560,000; Office salaries, $112,000; Federal income taxes withheld, $168,000; State income taxes withheld, $37,500; Social security taxes withheld, $41,664; Medicare taxes withheld, $9,744; Medical insurance premiums, $13,500; Life insurance premiums, $10,500; Union dues deducted, $7,500; and Salaries subject to unemployment taxes, $63,000. The employee pays 40% of medical and life insurance premiums. Assume that FICA taxes are identical to those on employees and that SUTA taxes are 5.4% and FUTA taxes are 0.6%.

1. Using the above information, complete the below table and prepare the journal entries to record accrued payroll and cash payment of the net payroll for July.

2. Using the above information, complete the below table.

3. Record the accrued employer payroll taxes and all other employer-paid expenses and the cash payment of all liabilities for July-assume that FICA taxes are identical to those on employees and that SUTA taxes are 5.4% and FUTA taxes are 0.6%.

Q2. Hitzu Co. sold a copier (that costs $7,500) for $15,000 cash with a two-year parts warranty to a customer on August 16 of Year 1. Hitzu expects warranty costs to be 4% of dollar sales. It records warranty expense with an adjusting entry on December 31. On January 5 of Year 2, the copier requires on-site repairs that are completed the same day. The repairs cost $131 for materials taken from the repair parts inventory. These are the only repairs required in Year 2 for this copier.

1. How much warranty expense does the company report for this copier in Year 1?

2. How much is the estimated warranty liability for this copier as of December 31 of Year 1?

3. How much is the estimated warranty liability for this copier as of December 31 of Year 2?