Paid future absences
• LO13–3
On January 1, 2018, Poplar Fabricators Corporation agreed to grant its employees two weeks of vacation each year, with the stipulation that vacations earned each year can be taken the following year. For the year ended December 31, 2018, Poplar Fabricators’ employees each earned an average of $900 per week. Seven hundred vacation weeks earned in 2018 were not taken during 2018.
Required:
1. Prepare the appropriate
2. Suppose that, by the time vacations actually are taken in 2019, wage rates for employees have risen by an average of 5 percent from their 2018 level. Also, assume wages earned in 2019 (including vacations earned and taken in 2019) were $31 million. Prepare a
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Intermediate Accounting
- LO.2 Oak Corporation has the following general business credit carryovers. If the general business credit generated by activities during 2019 equals 36,000 and the total credit allowed during the current year is 60,000 (based on tax liability), what amounts of the current general business credit and carryovers are utilized against the 2019 income tax liability? What is the amount of unused credit carried forward to 2020?arrow_forwardExercise 13-4 (Algo) Paid future absences [LO13-3] JWS Transport Company's employees earn vacation time at the rate of 1 hour per 40-hour work period. The vacation pay vests immediately (that is, an employee is entitled to the pay even if employment terminates). During 2024, total salaries paid to employees equaled $425,000, including $7,400 for Vacations actually taken in 2024 but not including vacations related to 2024 that will be taken in 2025. All vacations earned before 2024 were taken before January 1, 2024. No accrual entries have been made for the vacations. No overtime premium and no bonuses were paid during the period. Required: Prepare the appropriate adjusting entry for vacations earned but not taken in 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list View journal entry worksheet No 1 Event 1 General Journal Salaries expense Liability compensated future absences Debit 5,380…arrow_forwardPR.05.09 Since the SUTA rates changes are made at the end of each year, the available 2019 rates were used for FUTA and SUTA. Note: For this textbook edition the rate 0.6% was used for the FUTA tax rate for employers. Example 5-2 Robertson Company paid wages of $515,000 for the year. Included in the payments was $250,000 paid to hourly employees over the $7,000 limit for each employee. The only employees who were not paid hourly were the president and vice president who were paid $125,000 and $90,000, respectively. Included in the wages was a payment of $2,000 to a director who only attended director meetings. Since the FUTA wage limit is $7,000 per employee, Robertson Company would pay a FUTA tax on $62,000 [$515,000 – $250,000 – $201,000 (president and vice president over the limit by $118,000 and $83,000, respectively) – $2,000 (director’s pay)]. The partnership of Keenan and Kludlow paid the following wages during this year: M. Keenan (partner) $106,500 S. Kludlow…arrow_forward
- PROBLEM 8 On January 1, 2022, Clark Co. received a P3,000,000, 10% note from a customer upon the sale of its goods. The note is to be paid in six equal semi-annual installments, plus interest on the outstanding balance every June 30 and December 31, starting June 30, 2021. The effective rate on the note is 9%. 1. How much is the note upon initial recognition? 2. How much is the interest income recognized by Clark in 2022? 3. How much is the carrying amount of the note on December 31, 2023?arrow_forwardEXERCISE 7 Filmore Company started selling a new product that carried a 2-year warranty against defects. The warranty provides assurance that the new product will function as intended based on agreed-upon specifications. Based on past experiences with other products, the estimated warranty costs related to peso sales are computed as follows: First year of warranty 3% Second year of waranty 5% Total sales and actual warranty repairs for 2019 and 2020 are given: 2019 2020 P 4,200,000 Actual warranty expenditures 148,800 Sales P 6,960,000 180,000 REQUIRED: a.) What amount should Fillmore report as its estimated warranty liability as of December 31,2020? b.) Based on the above data, assuming that sales and repairs occur evenly throughout the year, how much would be the predicted warranty expense covering 2019 and 2020 sales still under warranty at December 31,2020?arrow_forwardPrim erences Exercise 5-20 (Algo) Deferred annuities; solving for annuity amount (LO5-8,5-9] On April 1, 2024, Antonio purchased appliances from the Acme Appliance Company for $1100. In order to increase sales, Acme allows customers to pay in installments and will defer any payments for six months. Antonio will make 18 equal monthly payments, beginning October 1, 2024. The annual interest rate implicit in this agreement is 24% Required: Calculate the monthly payment necessary for Antonio to pay for his purchases Note: Use tables, Excel, or a financial calculator. Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. (EY of 51. PV of 51, EVA of SJ. EVA of $1. EVAD. of $1 and PVAD of $1) Monthly payment S A 51arrow_forward
- A. On January 1, 2021, Packman Corporation agreed to grant its employees two weeks of vacation each year, with the stipulation that vacations earned each year can be taken the following year. For the year ended December 31, 2021, Packman employees each earned an average of $900 per week. Seven hundred vacation weeks earned in 2021 were not taken during 2021. REQUIRED: Prepare the appropriate adjusting entry for vacations earned but not taken in 2021. Suppose that, by the time vacation actually are taken in 2022, salary rates for employees have risen by an average of 5% from their 2021 level. Also, assume salaries earned in 2022 (including vacations earned and taken in 2022) were $31 million. Prepare a journal entry that summarizes 2022 salaries and the payment for 2021 vacations taken in 2022. B. Celopatra Corporation introduced a new line of home shades in 2021 that carry a two-year warranty against manufacturer’s defects. Based on their experience…arrow_forwardProblem 12-24 (c) (LO. 3) Ambre Corporation hires eight individuals on April 2, 2019, all of whom qualify for the work opportunity tax credit. Five of the individuals receive wages of $8,600 during 2019, and each individual works 510 hours during the year. The other three individuals each work 300 hours, and each receives wages of $3,400 during the year. If Ambre pays total wages of $191,000 to its employees during the year, how much of this amount is deductible in 2019, assuming the work opportunity credit is taken? $_____________arrow_forwardProblem 12-24 (b) (LO. 3) Olenka Corporation hires 13 individuals on March 12, 2019, all of whom qualify for the work opportunity credit. Nine of these individuals receive wages of $16,500 during 2019, and each individual works more than 400 hours during the year. The remaining four employees worked 100 hours and earned $2,100 during the year. b. If Olenka pays total wages of $312,000 to its employees during the year, how much of this amount is deductible in 2019, assuming the work opportunity credit is taken? $_____________arrow_forward
- Problem 24 Safari Bank granted a loan to a borrower on Jan. 1, 2020. The interest on the loan is 8% payable annually starting Dec. 31,2020. The loan matures in three years on Dec. 31,2022. Data related to the loan are: Principal amount Origination fees charged against the borrower Direct Origination cost incurred 1,500,000 50,000 130,150 After consideration of the origination fees charged against the borrower and the direct origination cost incurred, the effective rate on the loan is 6%. Required: 1. Compute the carrying amount of the loan receivable on December 31,2020, December 31,2021, December 31,2022. 2. Prepare a table of amortization for the loan receivable. 3. Prepare the journal entries for 2020, 2021 and 2022.arrow_forwardQUESTION 3 Staples extends a lifetime replacement warranty on all its financial calculators. Using past experience, Staples estimates that 1% of all units sold will be returned and require replacement at their average cost. On January 1, 2020, the balance in Staples' Estimated Warranty Liability account was $2,020. On January 2nd 2020 Staples purchased 6,000 calculators for $240,000 to have available in inventory. Staples sells its calculators for $50/unit, and during 2020, sales totaled $275,000. The actual number of units returned and replaced was 50. 1. Prepare the entry to estimate warranty liabilities based on the calculators sold for 2020. Assume the adjustment is made on December 31". 2. Record the replacement of the calculators returned in 2020 (use a date of December 31) 3. Calculate the balance in the Estimated Warranty Liability account at December 31, 2020.arrow_forwardEXERCISE 6 On January 1,2019, Jackson Company introduced a new line of product that carries a 3 year warranty against factory defects. The product warranties provide assurance that the new line of product will function as intended based on agreed-upon specifications. Estimated warranty costs related to peso sales are as follows: 1% of sales in the year of sale, 2% of sales in the year after sale, and 3% of sales in the second year after sale. Sales and warranty expenditures for the period 2019 to 2021 were as follows: 2019 |2020 2021 Sales P 1,000,000 P 2,500,000 P 3,500,000 Actual warranty expenditures 8,000 38,000 112,500 REQUIRED: Prepare journal entries to record the foregoing for year 2019 to 2021. The company's reporting period is the calendar year.arrow_forward
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