Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
1
1. Robert, a new client of yours, is a self-employed caterer in Nashville, Tennessee. Robert drives his personal van when delivering catered meals to customers. You have asked him to provide the amount of business miles driven using his vehicle. You are planning on using the standard mileage method to calculate Robert's deduction for transportation costs. Robert has responded by saying, "Well, I don't really keep track of my miles. I guess I drove around 3,000 miles last year for the business." What would you say to Robert?
2. The statement of financial position of Soorkee Company as of December 1, 2011 had book and fair market values as shown below:
|
Book Value |
Fair Value |
||
|
Current Assets |
P240 000 |
P280,000 |
|
|
Land |
20,000 |
100,000 |
|
|
Building and Equipment (net) |
400,000 |
270,000 |
|
|
Patents |
10,000 |
30,000 |
|
|
Total Assets |
P670,000 |
P680,000 |
|
|
Liabilities |
P250,000 |
P250,000 |
|
|
Ordinary Share Capital |
100,000 |
||
|
Accumulated Profits |
320,000 |
430,000 |
|
|
Total Liabilities and Shareholders’ equity |
P670,000 |
P680,000 |
On December 1, 2011, Pulaskee Company purchased all of Soorkee Company’s share for P600,000.
Required:
- Prepare a journal entry on the books of Pulaskee Company to record the share acquisition.
- Prepare a schedule showing the determination and allocation of the difference between the consideration given and the book value of interest acquired.
- Prepare the consolidated statements worksheet elimination entries.
3. on the financial statements. (6.2A) Summarize factory payroll taxes. (Obj.9). A summary of taxable rory wages or the Sunshine Corporation for the month of March 2006 is shown below. Department Factory Supply Factory Administration Cutting Assembly Finishing Wages Subject To: Social Security (6.2%) Federal (.8%) and State (3.8%) and Medicare (1.5%) Taxes Unemployment Taxes $52,800 $20,130 53,260 12,110 72,380 28,640 79,910 33,750 84,620 30,970 Instructions 1. Compute the employer's payroll taxes to be charged to each department. Use the data to prepare the summary of factory payroll taxes for March 2006. 2. Prepare an entry in general journal form to record the taxes. Use the account titles in your textbook. journal entries.
4.
The January 1, 2011 statement of financial position of Skittle Company at book and market values is as follows:
|
Book Value |
Fair Value |
||
|
Current Assets |
P 800,000 |
P 750,000 |
|
|
Property and Equipment (net) |
900,000 |
1, 000,000 |
|
|
Total Assets |
P 1,700,000 |
P1,750,000 |
|
|
Current Liabilities |
P 300,000 |
P 300,000 |
|
|
Long-term Liabilities |
500,000 |
460,000 |
|
|
Ordinary Share Capital, P1 par |
100,000 |
||
|
Share Premium |
200,000 |
||
|
Accumulated Profits |
600,000 |
||
|
Total Liabilities and Shareholders’ equity |
P1,700,000 |
Polypeptide Company paid P950,000 in cash for 90% of Skittle Company’s ordinary share capital.
Required:
- Prepare a journal entry on Polypeptide’s books to record the acquisition of the Skittles share.
- Prepare a schedule of the allocation of the difference between the consideration given and the book value of interest acquired from Skittle Company.
- Prepare the elimination entries for the consolidated statements worksheet.
Expert Solution
1. The IRS rules provides that whether vehicle expenses is claimed by actual method or standard mileage method, adequate documents are required to be maintained.
For mileage claim the requirement is to maintain "log" of vehicle which would record each travel trip detail such date date, orgin place, destination place, business purponse, starting meter reading, closing meter reading, milege.
Again the requirement is "contemporaneous" to the extent possible.
In view of above Robert would be advised to generate Vehicle log to the extent possible and on that basis only mileage deduction can be claimed.
2.
| Fair value of Assets & Liabilities | |
| Particulars | Amount |
| Current Assets | 2,80,000 |
| Non Current Assets | |
| Land | 1,00,000 |
| Building & Equipment | 2,70,000 |
| Patents | 30,000 |
| Total Assets | 6,80,000 |
| Liabilities | 2,50,000 |
| Total Liabilities | 2,50,000 |
| Net Assets | 4,30,000 |
| Purchase Consideration | 6,00,000 |
| Extra Amount Paid/Goodwill | 1,70,000 |
| Accounts | Debit | Credit |
| Goodwill | 1,70,000 | |
| Assets | 6,80,000 | |
| Liabilities | 2,50,000 | |
| Cash/Bank | 6,00,000 | |
| 8,50,000 | 8,50,000 |
3. In addition to salaries and wages, the employer will incur some or all of the following payroll-related expenses:
Employer portion of Social security tax, medicare tax, state unemployment tax, federal unemployment tax and some other taxes too which is explained below in detail as per the requirement of the question
Q.1. Compute the employer's payroll taxes to be charged to each department. Use the data to prepare the summary of factory payroll taxes for march 2006.
Sol. a.)Social Security Taxes : For Social Security taxes, the employer must contribute/remit an additional amount, which is an expense for the employer in addition to the employee's share.
As in this case, Social Securty tax is 6.2% and this is subject to maximum value cap (which is $94200 annual wages and salary in 2006) but in the given question it is stated that the the given salary is taxable so we assume that whole amount is within the maximum limit so full amount is taxable salary.
Eg. in first department Factory Supply wages is $52800 so Employee's share is 6.2% = $3273.6 and employer has to contribute the same amount i.e. $3273.6. So total amount of social security tax is $6547.2.
in the question, only employer's share has been asked which is shown in below table.
| Department | Wages Amount | Social Security Tax Amount(6.2%)(Employer's Share) |
| Factory Supply | 52800 | 3273.6 |
| Factory Administration | 53260 | 3302.12 |
| Cutting | 72380 | 4487.56 |
| Assembly | 79910 | 4954.42 |
| Finishing | 84620 | 5246.44 |
| TOTAL | 342970 | 21264.14 |
b) Medicare Taxes: 1.5%(given rate) : In addition to the employee's Medicare tax there is also an employer's Medicare tax. The employer's Medicare tax is considered to be an expense for the employer.Unlike the Social Security tax, the Medicare tax has no cap (ceiling or limit)
| Department | Wages Amount | Medicare Tax Amount(1.5%)(Employer's Share) |
| Factory Supply | 52800 | 792 |
| Factory Administration | 53260 | 798.9 |
| Cutting | 72380 | 1085.7 |
| Assembly | 79910 | 1198.65 |
| Finishing | 84620 | 1269.3 |
| Total | 342970 | 5144.55 |
C) Federal Unemployment Tax:- The federal unemployment tax is based on employee salaries and wages but the entire tax is paid by the employer. There is no withholding from an employee's salary or wages for the federal unemployment tax.
| Department | Wages Amount | Federal Tax Amount(0.8%) |
| Factory Supply | 20130 | 161.04 |
| Factory Administration | 12110 | 96.88 |
| Cutting | 28640 | 229.12 |
| Assembly | 33750 | 270 |
| Finishing | 30970 | 247.76 |
| Total | 125600 | 1004.8 |
D) State Unemployment Tax: Generally, states require that the employers pay the entire unemployment tax rate. (Only a few states require employees to make a minimal contribution.)
| Department | Wages Amount | State Unemployment Tax Amount(3.8%) |
| Factory Supply | 20130 | 764.94 |
| Factory Administration | 12110 | 460.18 |
| Cutting | 28640 | 1088.32 |
| Assembly | 33750 | 1282.5 |
| Finishing | 30970 | 1176.86 |
| Total | 125600 | 4772.8 |
2) Prepare General journal :
Treatment of Employer's Share of Taxes : Employer's share of taxes are expense of employer so it is debited as an expense along with creating a liability till the time tax is not deposited.
Treatment of Employee's share of Taxes : Employee's share is withholding tax which is deducted from their wages so the wages payable to employee's gets reduced by the tax amount and tax amount become the liability till the time not deposited.
see the following journal entry
| Account Title | Debit | Credit | |
| 1. | Factory Supply Wages Dr | 52800 | |
| Factory Administration Wages Dr | 53260 | ||
| Cutting Wages Dr | 72380 | ||
| Assembly deptt Wages Dr | 79910 | ||
| Finishing Deptt Wages Dr | 84620 | ||
| Social Security Tax (employer's share-expense) | 21264.14 | ||
| Medicare Tax (Employer's Share-Expense) | 5144.55 | ||
| Social Security Tax Payable (Employee's share withholding from salary) | 21264.14 | ||
| Social Security Tax Payable (Employer's share Liability) | 21264.14 | ||
| Medicare Tax Payable (Employee's share withholding from salary) | 5144.55 | ||
| Medicare Tax Payable (Employer's share Liability)) | 5144.55 | ||
| Wages Payable | 316561.31 | ||
| 2. | Factory Supply Wages Dr | 20130 | |
| Factory Administration Wages Dr | 12110 | ||
| Cutting Wages Dr | 28640 | ||
| Assembly deptt Wages Dr | 33750 | ||
| Finishing Deptt Wages Dr | 30970 | ||
| Federal Unemployment Tax Dr | 1004.8 | ||
| State Unemployment Tax Dr | 4772.8 | ||
| Federal Unemployment Tax Payable | 1004.8 | ||
| State Unemployment Tax Payable | 4772.8 | ||
| Wages Payable | 125600 | ||
4. Please use this google drive link to download the answer file.
https://drive.google.com/file/d/12Fldg4gfu-9BU42VP0lVm1CbB_XDA6G7/view?usp=sharing
Note: If you have any trouble in viewing/downloading the answer from the given link, please use this below guide to understand the whole process.
https://helpinhomework.org/blog/how-to-obtain-answer-through-google-drive-link
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
