7252569-MIdterm-1 (dragged) 4

7252569-MIdterm-1 (dragged) 4 - Kieso, Weygandt, Warfield,...

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Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Eighth Canadian Edition 13-5 16. A company sometimes receives cash in advance of the performance of services or issuance of merchandise. Such transactions result in a credit to a deferred or unearned revenue account classified as a current liability on the balance sheet. As claims of this nature are redeemed, the liability is reduced and a revenue account is credited. Taxes Payable 17. Current tax laws require most business enterprises to collect sales taxes from customers and income taxes from employees during the year and periodically remit these collections to the appropriate governmental unit. In such instances, the enterprise is acting as a collection agency for a third party. If tax amounts due to governmental units are on hand at the financial statement date, they are reported as current liabilities. 18. Sales Taxes Payable: To illustrate the collection and remittance of sales tax by a company, assume that Bentham Company recorded sales for the period of $230,000. Further assume
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