[SOLUTION] Analyze Financials

This Competency Assessment assesses the following outcome(s):AC116M2: Answer each question by writing the calculation using complete sentence. Analyze the valuation and disclosure of liabilities in financial statements. Write each calculation in a complete sentenceLiabilities are debts of the business, and it is necessary to effectively manage them to protect the company. Companies have current assets that are due within one year and long-term assets due beyond one year. It is imperative that companies do not take on more obligations than they can handle, so understanding the impact they have on the accounts is essential. Accounting for liabilities affects the balance sheet and profitability of the company.10 Questions:(1).Sonoma Company has the following selected accounts after posting adjusting entries:Accounts Payable                                      $62,000   Notes Payable, 3-month                                40,000   Accumulated Depreciation—Equipment        14,000   Notes Payable, 5-year, 6%                        80,000   Payroll Tax Expense                                  4,000   Interest Payable                                          3,000   Mortgage Payable                                      120,000   Sales Taxes Payable                                38,000   Prepare the current liability section of Sonoma Company’s balance sheet, assuming $16,000 of the mortgage is payable next year. (For Notes Payable enter the account name only and do not provide any additional descriptive information e.g. due 2017, 5 Months.)Calculate the following: Notes Payable, Interest Payable, Accounts Payable, Sales Taxes Payable, Salaries and Wages Payable(2). Faulkner Company has the following selected accounts after posting adjusting entries:Accounts Payable                              $45,000Notes Payable, 3-month                    70,000Accumulated Depreciation-Equipment            14,000FICA Taxes Payable                        27,000Notes Payable 5-year,8%                    30,000Warranty Liability                                29,000Payroll Taxes Expense                          6,000Interest Payable                                  3,000Mortgage Payable                                      200,000   Sales Taxes Payable                            16,000   Prepare the current liability section of Faulkner Company’s balance sheet, assuming $25,000 of the mortgage is payable next year. (For Notes Payable enter the account name only and do not provide any additional descriptive information e.g. due 2017, 5 Months.)Calculate the current liabilities:  Accounts Payable, Notes Payable, Interest Payable, Sales Taxes Payable, Warranty Liability, FICA Taxes Payable(3). On December 1, Cypress Grove Company introduces a new product that includes a one-year warranty on parts. In December, 500 units are sold. Management believes that 5% of the units will be defective and that the average warranty costs will be $60 per unit.Prepare the adjusting entry at December 31 to accrue the estimated warranty cost. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)Identify December 31. Account titles and Explanation by Calculating the Warranty Expense and Warranty Liability(4). Blalock Company sells products with a 2-year warranty. Past experience indicates that 2% of the units sold will be returned during the warranty period for repairs. The average cost of repairs under warranty is estimated to be $75 per unit. During 2014, 7,000 units were sold at an average price of $400. During the year, repairs were made on 55 units at a cost of $3,600.Calculate the journal entries to record the repairs made under warranty and estimated warranty expense for the year. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)By calculating the Warranty Liability and Repair Parts by cost of honoring 55 warrantiesWarranty Expense and Warranty Liability by accrue estimated warranty costs on 140 warranty contracts(5). Maddy Peters’s regular hourly wage rate is $14, and she receives an hourly rate of $21 for work in excess of 40 hours. During a March pay period, Maddy works 47 hours. Maddy’s federal income tax withholding is $80, and she has no voluntary deductions. The FICA tax rate is 7.65%.Compute Maddy Peters’s gross earnings and net pay for the pay period. (Round answers to 2 decimal places, e.g. 15.25.)Calculate the Gross Earnings and Net Pay(6). Maddy Peters’s regular hourly wage rate is $14, and she receives an hourly rate of $21 for work in excess of 40 hours. During a March pay period, Maddy works 47 hours. Maddy’s federal income tax withholding is $80, and she has no voluntary deductions.Prepare the journal entry to record Maddy’s pay for the period. Use March 15 for the end of the pay period. (Round answers to 2 decimal places, e.g. 52.75. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)Prepare the  March 15th Account Titles and Explanation by caculating Salaries and Wages Expense, Federal Income Taxes Payable, FICA Taxes Payable Salaries and Wages Payable.(7). In February, gross earnings in Napoli Company totaled $75,000. All earnings are subject to 7.65% FICA taxes, 5.4% state unemployment taxes, and 0.8% federal unemployment taxes.Prepare the entry to record February payroll tax expense. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)Calculate the Payroll Tax Expense, FICA Taxes Payable, Federal Unemployment Taxes Pay, State Unemployment Taxes Payable(8). Employee earnings records for Oz Company reveal the following gross earnings for four employees through the pay period of December 15.T. Tucker        $ 105,700        D. Paiva        $125,700B. Bitney        $124,400                N. Doane        $128,200For the pay period ending December 31, each employee’s gross earnings is $4,800. The FICA tax rate is 7.65% on gross earnings of $127,200.Compute the FICA withholdings that should be made for each employee for the December 31 pay period. (Round answers to 2 decimal places, e.g. 52.75.)Calculate the FICA withholding for each: T. Tucker, B. Bitney, D. Paiva, N. Doane(9). If a 7%, 10-year, $800,000 bond is issued at face value and interest is paid annually, what is the amount of the interest payment at the end of the first year period?Calculate the Interest Payment(10). If the Bonds Payable account has a balance of $900,000 and the Discount on Bonds Payable account has a balance of $120,000, what is the carrying value of the bonds?Calculate the Carrying value of the bonds

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