113B1 - Curr Liability-probable obligations whose...

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Curr Liability -probable obligations whose liquidation is reasonably expected to require use of existing resources properly classified as current assets, or the creation of other current liabilities. CA- use during operating cycle. Zero Interest bearing note issued- issue 102 DR cash 100k, discount 2k, cr np. Short term obligations expected to be refinanced- exclude from CL if 1. Intend to refinance on longterm, 2. Demonstate ability to refinance. Div payable- paid within 3 months, undeclared div on cum preferred stocknot recognized as liab. Returnable cash deposits - can be short or long liab, guarantees to cover payment of expected future obligations. Cl,sell tickets- DR cash, CR unearned sales rev FUTA- 6.2% on first 7000 of compensation. Employee payroll deduction- dr : sal and wage exp, cr withholding taxes, fica tax payable, union dues payable, cash record payroll taxes- dr payroll tax exp, cr fica taxes payable, futa taxes payable, suta taxes payable. Bonus, dr sal and wage exp, dr sal and wage payable, 2015 dr sal and wage payable, cr cash. Gain contingency- 1. Possible receipts of gifts, donations, asset sales, etc. 2. Possible refunds from govt, 3. Pending court cases, 4. Tax loss carryforward. Gain contingencies are not recorded, disclosed if probability of receipt is high. Loss contingency- probable- accrue and disclose, reasonably possible- footnote, remote- ignore. Ex - lawsuit that is probable- dr lawsuit loss, cr lawsuit liab. Cash basis method- expense warranty costs as incurred. Accrued- basis method- change warranty exp to operating exp in year of sale. Dr cash/ar , cr sales rev, Dr warranty exp, cr cash, inv, accrued payroll. Dr warranty exp, cr warranty liability. Recognize warranty exp 2015, dr warranty liab, cr cash, inv, accrued payroll. Premium/coupon - DR inv of premium, cr cash ( do#bowls *cost of bowl) record redemption- dr cash (boxtops redeemed/#boxtop required *cost of each boxtop. Premium exp, cr inv of premium-(boxtops redeemed/boxtop required) *cost of bowl. End of yr adjusting liability - dr premium exp cr premium liab, to find this- total estimated redemptions – boxtops redeemed in 2014= estimated future redemp. Then do (estimated future redemp/#ofboxtopsrequired) * (cost of bowl – cost). environment- retiring- DR drilling platform, cr asset retirement obligation. Accrue int exp, DR int exp (aro*int) cr asset retirement obligation. Dismantle at contract price. DR ASO, cr gain/loss, cash. Presentation of contingency- disclosure include nature, estimate of loss. Ratio- current= ca/cl, acid test- cash+short term investment+net receivable/ (cl).
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