Ch09 - Liabilities

Ch09 - Liabilities - Chapter 9 Liabilities Overview Current...

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Unformatted text preview: Chapter 9 Liabilities Overview Current liabilities known amounts Contingent liabilities estimated Present value and future value concepts 9-1 Example: 28-Jun-09 Current liabilities: Short-term borrowings- $ Accounts payable 258,900 Accrued compensation 255,200 Accrued occupancy costs 164,500 Accrued taxes 131,900 Other accrued expenses 327,300 Deferred revenue 419,700 Current portion long-term debt 400 Total current liabilities 1,557,900 Long-term debt 549,400 Other long-term liabilities 407,800 Total liabilibities 2,515,100 9-2 Current liabilities are obligations that will be paid within the next year. Long-term liabilities are debts that will not be paid within the next year. 1. Current liabilities No set order for presentation. Many companies, as a matter of custom, show notes payable and accounts payable first. 2. Long-term liabilities are presented after current liabilities. Liabilities Financial Statement Presentation 9-3 Current Liabilities Known amounts 9-4 Gross Pay Accrued Compensation Salaries and Employee Deductions 9-5 O bj1 0 1 O bj1 0 2 Federal/state income tax withheld FICA tax withheld Medicare tax withheld Net pay Cash you receive Accrued Compensation Salaries and Employee Deductions 9-6 Gross Pay Fed/ State tax FICA Medi- care Other * Net Pay $500.00 $100.00 $31.00 $7.00 $362.00 $500 x 20% A pay stub would look like this: * Health insurance, union dues, contributions to retirement account, etc. $500 x 6.2% $500 x 1.45% D e b it C re d it D e c 3 1 S a la rie s e x p e n se 5 0 0 F e d /sta te ta x p a y a b le 1 0 0 F IC A p a y a b le 3 1 M e d ic a re p a y a b le 7 S a la rie s p a y a b le 3 6 2 D a te D e sc rip tio n The entry to record payroll expense for the month and the related employee deductions would be: Accrued Compensation Salaries and Employee Deductions 9-7 When the payroll and related employee deductions are paid, the entry would be: Accrued Compensation Salaries and Employee Deductions 9-8 D e b it C re d it J a n 2 1 0 0 3 1 M e d ic a re p a y a b le 7 S a la rie s p a y a b le 3 6 2 C a sh 5 0 0 D a te D e sc rip tio n F e d /sta te ta x p a y a b le F IC A p a y a b le Employers are required to pay the following taxes by governmental agencies. 1. Employer must match each employees FICA and Medicare contribution 1. Federal unemployment taxes (FUTA) 1. State unemployment taxes (SUTA) Accrued Compensation Employer contributions 9-9 De bit Cre dit De c 31 P a yroll Ta x Ex pe nse 38 FICA pa ya ble 31 M e dica re pa ya ble 7 Da te De scription The entry to record the employer match for FICA and Medicare would be: Accrued Compensation Employer contributions 9-10 When the employer payroll related deductions are paid, the entry would be: Accrued Compensation Employer contributions 9-11 De bit Cre dit Ja n 2 FICA pa ya ble 31 M e dica re pa ya ble 7 Ca sh 38 Da te De scription 1. Employee absences for which the employee will be paid: vacation and illness 2. Accrue a liability if:...
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Ch09 - Liabilities - Chapter 9 Liabilities Overview Current...

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