Chapter 10 Flashcards
Current liability
A debt that a company reasonably expects to pay
- ) from existing current assets or through creation of other current liabilities
- ) Within one year or the operating cycle, whichever is longer
Notes payable
An obligation in the form of a written note
Why notes payable instead of accounts payable
Give the lender written documentation of the obligation in case legal remedies are needed to collect the debt
Journal Entry accepting notes payable
Cash XXX
Notes Payable XXX
Journal Entry for accrual of interest
Interest Expense XXX
Interest Payable XXX
Journal Entry for Payment of Note Receivable
Notes Payable XXX
Interest Payable XXX
Cash XXX
Sales Tax Journal Entry by Company before remitting it to the government
Cash XXX
Sales Revenue XXX Sales Taxes Payable XXX
Journal entry when company remits sales tax to government
Sales Taxes Payable XXX
Cash XXX
Cooley Grocery store serves only as a ______________ for the taxing authority
collection agent
Company rings up sales taxes seperately:
Total receipts of 10,600 with a 6% sales tax
find sales tax amount
10,600 / 1.06 = 10,000
10600 - 10000 = 600
Journal entry when a company receives an advance
Cash XXX
Current liability XXX
Journal entry when company earns the revenue
Unearned revenue account XXX
Earned Revenue Account XXX
Airline
Unearned revenue: Unearned Passanger Ticket Revenue
Earned Revenue: Passenger Ticket Revenue
Magazine publisher
Unearned Revenue: Unearned Subscription Revenue
Earned Revenue: Subscription Revenue
Hotel
Unearned Revenue: Unearned Rental Revenue
Earned Revenue: Rental Revenue
Companies often identify current maturities of long-term debt on the balance sheet as _________________
long-term debt due within one year
account for social security
FICA Taxes Payable
Account for federal income tax
Federal Income Taxes Payable
Account for State Income Tax
State Income Taxes Payable
Account for unemployment federal taxes
Federal Unemployment Taxes Payable
Account for unemployment state taxes
State Unemployment Taxes Payable
Wages expense and Wages payable journal entry
Salaries and Wages Expense XXX
FICA Taxes Payable XXX Federal Income taxes Payable XXX State Income Taxes Payable XXX Salaries and Wages Payable XXX
Company’s Payaroll Tax Expense Journal Entry
Payroll Tax Expense XXX
FICA Taxes Payable XXX Federal Unemployment Taxes Payable XXX State Unemployment Taxes Payable XXX
Long-term liabilities
Obligations that a company expects to pay more than one year in the future