|Accounting I||© 2008 Tibebe S. Mengistu|
DaimlerChrysler, one of the world's largest automakers, had the following items on its June30, 1999 balance sheet when it was formed by the merger of Daimler Benz and Chrysler. (German marks in millions)
|Cash and cash equivalents||DM 9,099|
|Additional paid-in capital||17,329|
Prepare the liabilities section of DaimlerChrysler's balance sheet. And separate the accounts as current and long-term liabilities.
During 20X6 a Company had sales of $800,000. The company estimates that the cost of servicing products under warranty will average 3% of sales.
1. Prepare journal entries for sales revenue and the related warranty expense for 20X6. Assume all sales are for cash.
2. The liability for warranties was $11,400 at the beginning of 20X6. Expenditures (all in cash) to satisfy warranty claims during 20X6 were $20,400, of which $4,500 was for products sold in 20X6. Prepare the journal entry for the warranty expenditures.
3. Compute the balance in the Liability for Warranties account at the end of 20X6.
For the week ended September 28, a manufacturer company had a total payroll of $200,000. Three items were withheld from employees' paycheck: federal tax of 7.1% of payroll; income tax which average 21% of the payroll; and employees' savings that are deposited in their Credit Union, which are $10,000. All three items were paid on September 30.
1. Use the balance sheet equation to analyze the transactions on September 28 and September 30.
2. Prepare journal entries for the recording of the recording of the items in requirement 1.
3. In addition to the payroll, the company pays payroll taxes of 9%, health insurance premiums of $12,000 and contributions to the employees' pension fund of $16,000. Prepare journal entries for the recognition and payment of these additional expenses.