Chapter 10: Acc. For Current Liabilities

Question 1

What is Notes Payable

Answer 1

A promise to pay the other party in the future

Question 2

Journal Entry Notes Payable

Answer 2

1. recognize the note
   Cash dr (A+) & Notes Payable (L+)
2. Accrued interest
   Interest Expense Dr (E-) & Interest Payable Cr (L-)
3. Payback
   Dr: Interest payable (L-), Interest Expense (E-), Notes Payable (L-)
   Cr: Cash (A-)

Question 3

How to calculate Mortage?

Answer 3

1. Begining balance x Interest = Interest Expense
2. Cash payment - Interest Expense = Y
3. Begining Balance - Y = begining balance for next year

Question 4

Record Mortgage payable

Answer 4

1. Cash Dr (A+) & Mortage Loan Cr (L+)
2. Dr: Interest Expense (E-), Mortage Loan (L-)
   Cr: Cash (A-)

Question 5

Value Added taxes Payable journal entry

Answer 5

Dr Cash (A+)
Cr Sales Revenue (E+). VAT Taxes Payable (L+)

Question 6

Sale Tax Payable Journal Entry

Answer 6

Dr: Cash (A+)
Cr: Sales Revenue (E+), Sales Taxes Payable (L+)

Question 7

Salaries & Wages (Payroll deductions) Journal entry

Answer 7

Dr: Salary Expense (E-)
Cr: Salaries Payable (L+), Social Security taxes Payable (L+)

Question 8

What is a Warranty Liability

Answer 8

• liability of uncertain timing or amount
• used to account for the uncertainty of future expenditures required to settle obligation

Question 9

Estimation Warranty Liability

Answer 9

(nb of units sold x estimated rate of defective units) x average warranty repairs
- warranty claims honorred

Question 10

Journal ENtry Warranty Liability

Answer 10

1. Warranty Expense Dr (E-) & Cash Cr (A+)
2. Warranty Expense Dr (E-) & Warranty Liability Cr (L+)
3. Warranty Liability Dr (L-) & Cash Cr (A-)

Question 11

What is the amount of warranty expense and ending balance?

Answer 11

Beginning Provision + Warranty Expense - Settle Claims = Ending Provision