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$1.$ Knockoff Corporation makes a videogame unit known as the Gii. During the month of June, the following transactions occurred. Record any necessary journal entries for a$$e$.$

a$.$ Knockoff purchased $$300,000$ of raw materials inventory on account.

Account Title Debit Credit

Merchandise Inventory $$300,000$

Accounts Payable $$300,000$

b$.$ The company incurs salary expense of $$45,000,$ which will not be paid until the beginning of July.

Account Title Debit Credit

Salary Expense $$45,000$

Salary Payable $$45,000$

c$.$ Knockoff owes the IRS and other government entities $$120,000$ in taxes.

Account Title Debit Credit

Income Tax Expense $$120,000$

Income Tax Payable $$120,000$

d$.$ OK Buy places an advance order for Giis and pays Knockoff $$23,000.$ The Giis will be shipped in July.

Account Title Debit Credit

Cash $$23,000$

Unearned Sales Revenue $$23,000$

e$.$ Knockoff owes a local bank $$4,000$ in interest.

Account Title Debit Credit

Interest Expense $$4,000$

Interest Payable $$4,000$

f$.$ If Knockoff has $$800,000$ in current assets, and all current liabilities are given in a$$e above, what is Knockoff$$s current ratio?

g$.$ Knockoff$$s main competitor, PlayItAgain, has a current ratio of $2\mathrm{.}1.$ You are trying to decide which company to invest in$.$ Which current ratio do you prefer? Why?

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