1. Determine the quick ratio for both companies. Round to one decimal place.
Answer
Check Figure: Apple, 1.0
2. Interpret the quick ratio difference between the two companies.
11-7fProblems: Series A
PR 11-1A
Liability transactions
Obj. 1, 5
The following items were selected from among the transactions completed by O’Donnel Co. during the current year:
| Jan. 10. | Purchased merchandise on account from Laine Co., $240,000, terms n/30. | |
| Feb. 9. | Issued a 30-day, 4% note for $240,000 to Laine Co., on account. | |
| Mar. 11. | Paid Laine Co. the amount owed on the note of February 9. | |
| May 1. | Borrowed $160,000 from Tabata Bank, issuing a 45-day, 5% note. | |
| June 1. | Purchased tools by issuing a $180,000, 60-day note to Gibala Co., which discounted the note at the rate of 5%. | |
| 15. | Paid Tabata Bank the interest due on the note of May 1 and renewed the loan by issuing a new 45-day, 7% note for $160,000. (Journalize both the debit and credit to the notes payable account.) | |
| July 30. | Paid Tabata Bank the amount due on the note of June 15. | |
| 30. | Paid Gibala Co. the amount due on the note of June 1. | |
| Dec. 1. | Purchased office equipment from Warick Co. for $400,000, paying $100,000 and issuing a series of ten 5% notes for $30,000 each, coming due at 30-day intervals. | |
| 15. | Settled a product liability lawsuit with a customer for $260,000, payable in January. O’Donnel accrued the loss in a litigation claims payable account. | |
| 31. | Paid the amount due Warick Co. on the first note in the series issued on December 1. |
Instructions
1. Journalize the transactions.
2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year:
1. Product warranty cost, $23,000.
2. Interest on the nine remaining notes owed to Warick Co.
PR 11-2A
Entries for payroll and payroll taxes
Obj. 2, 3
The following information about the payroll for the week ended December 30 was obtained from the records of Pharrell Co.:
1. Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the following entries:
1. December 30, to record the payroll.
2. December 30, to record the employer’s payroll taxes on the payroll to be paid on December 31. Of the total payroll for the last week of the year, $40,000 is subject to unemployment compensation taxes.
Answer
Check Figure: Dr. Payroll Tax Expense, $60,675
2. Assuming that the payroll for the last week of the year is to be paid on January 5 of the following fiscal year, journalize the following entries:
1. December 30, to record the payroll.
2. January 5, to record the employer’s payroll taxes on the payroll to be paid on January 5. Because it is a new fiscal year, all salaries are subject to unemployment compensation taxes.