Ch11 - 11 Current Liabilities and Payroll Accounting...

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Chapter 11 Current Liabilities and Payroll Accounting Scan Study Objectives a Read Feature Story a Read Preview a Read text and answer p. 489 a p. 494 a p. 501 a p. 505 a Work Comprehensive p. 507 a Review Summary of Study Objectives a Answer Self-Study Questions a Complete Assignments a DO IT! After studying this chapter, you should be able to: 1 Explain a current liability, and identify the major types of current liabilities. 2 Describe the accounting for notes payable. 3 Explain the accounting for other current liabilities. 4 Explain the financial statement presentation and analysis of current liabilities. 5 Describe the accounting and disclosure requirements for contingent liabilities. 6 Compute and record the payroll for a pay period. 7 Describe and record employer payroll taxes. 8 Discuss the objectives of internal control for payroll. The Navigator STUDY OBJECTIVES A The Navigator A DO IT! Feature Story FINANCING HIS DREAMS What would you do if you had a great idea for a new product, but couldn’t come up with the cash to get the business off the ground? Small businesses often cannot attract investors. Nor can they obtain traditional debt financing through bank loans or bond issuances. Instead, they often resort to unusual, and costly, forms of nontraditional financing. Such was the case for Wilbert Murdock. Murdock grew up in a New York housing project, and always had great ambitions. This ambitious spirit led him 484 PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
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485 into some business ventures that failed: a medical diag- nostic tool, a device to eliminate carpal-tunnel syn- drome, custom-designed sneakers, and a device to keep people from falling asleep while driving. Another idea was comput- erized golf clubs that ana- lyze a golfer’s swing and provide immediate feed- back. Murdock saw great potential in the idea: Many golfers are willing to shell out considerable sums of money for devices that might improve their game. But Murdock had no cash to develop his product, and banks and other lenders had shied away. Rather than give up, Murdock resorted to credit cards—in a big way. He quickly owed $25,000 to credit card companies. While funding a business with credit cards might sound unusual, it isn’t. A recent study found that one-third of businesses with fewer than 20 employees financed at least part of their operations with credit cards. As Murdock explained, credit cards are an appealing way to finance a start-up because “credit-card companies don’t care how the money is spent.” However, they do care how they are paid. And so Murdock faced high interest charges and a barrage of credit card collection letters. Murdock’s debt forced him to sacrifice nearly everything in order to keep his business afloat. His car stopped running, he barely had enough money to buy food, and he lived and worked out of a dimly lit apartment in his mother’s basement. Through it all he tried to maintain a positive spirit, joking
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Ch11 - 11 Current Liabilities and Payroll Accounting...

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