1. Partner investments; journal entries. The LP partnership was formed on January 1, 19X7, by investments from Bill Levy and Marv Parcells. Levy contributed $30,000 cash and $80,000 of land. Parcells contributed cash of $50,000 and equipment with a value of $20,000.
Prepare the journal entries needed to record the investments of Levy and Parcells.
2. Payroll accounting. Assume that the following tax rates and payroll information pertain to Brookhaven Publishing:
Social Security taxes: 6% on the first $55,000 earned
Medicare taxes: 1.5% on the first $130,000 earned
Federal income taxes withheld from wages: $7,500
State income taxes: 5% of gross earnings
Insurance withholdings: 1% of gross earnings
State unemployment taxes: 5.4% on the first $7,000 earned
Federal unemployment taxes: 0.8% on the first $7,000 earned
The company incurred a salary expense of $50,000 during February. All employees had earned less than $5,000 by month-end.
a. Prepare the necessary entry to record Brookhaven’s February payroll. The entry will include deductions for the following:
Social Security taxes
Medicare taxes
Federal income taxes withheld
State income taxes
Insurance withholdings
b. Prepare the journal entry to record Brookhaven’s payroll tax expense. The entry will include the following:
Matching Social Security taxes
Matching Medicare taxes
State unemployment taxes
Federal unemployment taxes
3. Current liabilities: entries and disclosure. A review of selected financial activities of Visconti’s during 20XX disclosed the following:
12/1 Borrowed $20,000 from the First City Bank by signing a 3- month, 15% note payable.
Interest and principal are due at maturity.
12/10 Established a warranty liability for the XY-80, a new product. Sales are expected to total 1,000 units during the month. Past experience with similar products indicates that 2% of the units will require repair, with warranty costs averaging $27 per unit
12/22 Purchased $16,000 of…