Indiana Jones Company had the following selected transactions.
Feb. 1 Signs a $50,000, 6 month, 9% interest bearing note payable to CitiBank and receives $50,000 in cash.
10 Cash register sales total $43,200, which includes an 8% sales tax.
28 The payroll for the month consists of salaries and wages of $50,000. All wages are subject to 8% FICA taxes. A total of $8,900 federal income taxes are withheld. The salaries are paid on March 1.
28 The company develops the following adjustment data.
1. Interest expense of $375 has been incurred on the note. 2. Employer payroll taxes include 8% FICA taxes, a 5.4% state unemployment tax, and a 0.8% federal unemployment tax.
3. Some sales were made under warranty. Of the units sold under warranty, 350 are expected to become defective. Repair costs are estimated to be $40 per unit.
Instructions
(a) Journalize the February transactions.
(b) Journalize the adjusting entries at February 28.
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