CL_USC_ACCY_401_posted

CL_USC_ACCY_401_posted - Current Liabilities (Ch 13) Page 3...

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Current Liabilities (Ch 13) Page 3 EXAMPLE 2: SHORT-TERM INTEREST-BEARING NOTE On 5/1/2011, College borrows $700 cash from Columbia Bank and signs a 6-month, 10% promissory note. Interest is payable at maturity. Prepare the entries to record the issuance of the note and any other entries required during 2011. College’s fiscal year ends on June 30. Step 1: Issuance of note (May 1, 2011) Cash 700 Note payable 700 Step 2: Accrual of interest (June 30, 2011)
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Current Liabilities (Ch 13) Page 5 EXAMPLE 3: PAID FUTURE ABSENCES (COMPENSATED ABSENCES) On January 1, 2011, Human Company agreed to grant its employees two weeks’ vacation each year, with the stipulation that vacations earned each year can be taken the following year. For the year ended December 31, 2011, Human’s employees each earned an average of $900 per week. One hundred (100) vacation weeks earned in 2011 were not taken during 2011. REQUIRED: i) Prepare the adjusting entry for vacations earned but not taken during 2011. Vacations earned but not taken (12/31/2011)
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Current Liabilities (Ch 13) Page 7 EXAMPLE 4: Buster’s Ice Cream Shoppe had $12 million of notes that mature in May 2012 and also had $4 million of bonds that mature in February 2012. On December 31, 2011, the company’s fiscal year end, management intended to refinance both on a long-
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CL_USC_ACCY_401_posted - Current Liabilities (Ch 13) Page 3...

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