ACCT 2000 Chapters 7

ACCT 2000 Chapters 7 - Chapter 7 Liabilities Liabilities...

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Chapter 7 Liabilities Liabilities are obligations, the company owes money/goods/services - a probable future economic sacrifice - 2 types o Current o Long Term Current Liabilities - must be paid off within 12 months of B/S date ex. B/S date 12/31/06; note payable issue 7/1/04, maturing 7/1/07, 3 year term Cant start long term but eventually will be one day due within 12 months Ex. 12/31/06 BS date; NP issued 7/1/06, due 7/1/08 Due more than 12 months so it is a long term liability Types of Current Assets : 1) Accounts Payable - bought good or services on credit. Net 30 days 2) Note Payable - signed a promissory note usually involving interest Ex 11/1/06 company borrowed 100,000 from its bank Terms 90 days mature date; 12% per year for 90 days 11/1/06 Cash 100,000 Notes Payable 100,000 60 days elapsed 12/31/06 AJE Interest Expense 2,000 Interest Payable 2,000 Interest = P X R X T (Principal X Rate X Time) = 100,000 X 12% X 60/360 = $2,000 Days in a Month 1/ - 31 5/ - 31 9/ - 30 2/ - 28 6/ - 30 10/ - 31 3/ - 31 7/ - 31 11/ - 30 4/- 30 8/ - 31 12/ - 31 Maturity Date - exclude date note is issued ex. 11/1/06 90 days loan 2/1/07 is not 90 days later 11 – 29 days 12- 31 days 1- 30 days 11/1 – 1/30 = 90 days 1/30/07 maturity date
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Ex. 5/15/06
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This note was uploaded on 04/08/2008 for the course ACCT 2000 taught by Professor Holmes during the Spring '08 term at LSU.

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ACCT 2000 Chapters 7 - Chapter 7 Liabilities Liabilities...

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