Question

2. a)

Journalize Payroll Tax

The payroll register of Patel Engineering Co. indicates $2,856 of social security withheld and $714.00 of Medicare tax withheld on total salaries of $47,600 for the period. Earnings of $13,800 are subject to state and federal unemployment compensation taxes at the federal rate of 0.6% and the state rate of 5.4%.

Provide the journal entry to record the payroll tax expense for the period. If an amount box does not require an entry, leave it blank. Round to two decimal places.

b)

Estimated Warranty Liability

Yummy Co. sold $450,000 of equipment during January under a two-year warranty. The cost to repair defects under the warranty is estimated at 5.5% of the sales price. On August 15, a customer required a $188 part replacement, plus $231 of labor under the warranty.

Required:

(a) Provide the journal entry for the estimated warranty expense on January 31 for January sales.

Jan. 31

(b) Provide the journal entry for the August 15 warranty work. If an amount box does not require an entry, leave it blank.

Aug. 15

c)

Quick Ratio

Nabors Company reported the following current assets and liabilities for December 31 for two recent years:

	Dec. 31, Current Year		Dec. 31, Previous Year
Cash	$1,560		$2,190
Temporary investments	3,410		4,910
Accounts receivable	6,390		3,350
Inventory	2,560		2,480
Accounts payable	7,100		5,500

Required:

a. Compute the quick ratio on December 31 of both years. If required, round your answers to one decimal place.

	Quick Ratio
December 31, current year
December 31, previous year

b. Is the quick ratio improving or declining?

Answer 1

The answer for 'a' is attached in below picture

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a Tournal Entry: Patel Engineering to Date Account Title) Explanation Debit Crodila Salary expenses 147600 To social security payable To Medicare tax payable To cash ( 47600 - 2856-718) (To record salary expenses paid after withhelding taxes) 2856 714 94030 & 828 828 Employee tax expenses По регуроолор compensation taxes payable (13800 x (504+0.6)%] I (To record unemployement conpensation taxes payable)