ACC 120 Notes on Chapter 8

ACC 120 Notes on Chapter 8 - ACC120NotesonChapter8...

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ACC 120 Notes on Chapter 8 08/11/2010 20:25:00 Current Liabilities - sacrifice or use of assets ***not going to go into the operating cycle*** require sacrifice or loss of an assets the past event was the purchase of goods and the present obligation is  money that is due as a result Liabilities; Current – payable within one year Longterm -  longer than one year Liquidity Ratio’s Working Capital Current Asset – Current Liabilities Current Ratio – Current Asset/Current Liabilities 2:1 is good ratio  “risk is going to focus on results” banks don’t throw money after unprofitable firms. Notes Payable is important to review – interest is calculate one time ***BE 8-1*** p 369                                                        Dr      |      Cr Nov.1 Cash                                 3,000,000      Notes Payable                                3,000,000 Dec. 31 Interest Expense                 30,000               Interest Payable                             30,000 6 months means it would be due at the end of April
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April 30 Notes Payable                 3,000,000             Interest Payable                   30,000             Interest Expense                  60,000                   Cash                                         3,090,000 **p. 371** 8-1)    Nov. 1   Cash                           50,000                           Notes Payable                     50,000        Dec. 31      Interest Expense           500                            Interest Payable                 500         Jan. 31  Notes Payable             50,000                      Interest Payable              500                      Interest Expense             250                                                                   50,750 8-2)    Aug 1    Cash                     20,000,000                         Notes Payable                      20,000,000
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This note was uploaded on 10/22/2011 for the course ACCT 3551 taught by Professor Brown during the Spring '11 term at UNC.

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ACC 120 Notes on Chapter 8 - ACC120NotesonChapter8...

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