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AU / Accounting / ACCT 2110 / Give an example of a bipolar process.

Give an example of a bipolar process.

Give an example of a bipolar process.

Description

School: Auburn University
Department: Accounting
Course: Principles of Financial Accounting
Professor: Jennifer cornett
Term: Fall 2016
Tags: financial and Accounting
Cost: 50
Name: Test 4 Notes - Chapters 8 and 9
Description: These notes cover all the lecture slides and the chapters in the book. I also included all the examples from class and worked out problems.
Uploaded: 11/06/2016
12 Pages 45 Views 2 Unlocks
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Test 4Don't forget about the age old question of How do you analyze average efficiency?
Don't forget about the age old question of What are the basic characteristics of hamiltonian federalists?

Chapter 8If you want to learn more check out What is the meaning of bretton woods?

Current and Contingent Liabilities (within one year)

We also discuss several other topics like What financial crisis caused the french revolution?

Liability: probable future sacrifices of economic benefits

Debts or obligations (creditors’ claims on total assets)If you want to learn more check out What is included in a brand strategy?

Contingent liabilities: contingent on other eventsDon't forget about the age old question of How many anabolic steroids are there?

        May or may not end up turning into actual obligations (might happen)

        Obligations depend on the outcome of a future event

Characteristics: eventually require a payment of cash

        Certainty of payment: timing and amount

        Legal enforceability

        Payment recipient: pay someone else

Current - pay soon - current obligations

        Expected to be paid/satisfied by: using up current assets or performing a service

  • If both criteria not met: long-term

Example accounts: AIP, NIP, TIP, unearned revenues, other accrued liabilities

Account payable: when a business purchases goods/services on credit

(uniform commercial code)

Credit terms: 2/10, n30 (varies)

  • Seldom have interest
  • Do not require a formal agreement/contract

Notes Payable: legal document/agreement, current or long-term

        Usually require interest + principal x annual rate x time

        If due within 1 year of the balance sheet date = current

Entries: Example, borrows 30,000 interest 8% 6 month note

Record Note Payable ← Cash 30,000

                        Note payable 30,000

Actual Payment ← Note Payable 30,000

                Interest Expense 1,200 ← 30,000 x 0.08 x  6/12

                        Cash 31,200

*Remember to record interest expenses for the given year. It was acquired

        Dec. 31 ← Interest Expense     →        Both debited when paid off in the next year

                       Interest Payable       ↗

Company needs a payment extension: AID  → NIP

Accounts Payable  25,000                  changing the liability discounts

        Notes Payable 25,000    →  hope of new interest

Accrued liabilities (end of the period)

Recognize expenses in the right period →  wages expenses 7,000              Dec. 31

                        January 3                Wages payable 7,000

Pay 10,000 for 3 days from before →         Wages expense 3,000

                                                Wages payable 7,000

                                                Cash 10,000

Sales tax: collecting sales tax but does not recognize it as revenue % of sales price

  • Liabilities until they are paid to the taxing authority

  • Example: sold 3,000 tires at $75 on credit = 225,000

        State tax 7%: 15,750

        City tax 1%: 2,250

                                         18,000        

  • March 31
  • Accounts Receivable: 243,000
  • Sales revenue:  225,000
  • Sales tax (states) 15,750 ↘
  • Sales tax (city)       2,250   →     recognized as a liability

Sales tax payable (state) 15,750

Sales tax payable (city) 2,250

                      Cash 18,000

Sales tax sold 35 at 850 = $29,750

        7% tax = $29,750 x 0.07 = $ 2,082.50

Sale:   ←  AIR                  31,832.50

        Sales Revenue    29,750

        Sales Tax              2,082.50

Pay Tax: Sales tax     2,082.50

                 Cash     2,082.50

*Wages/payroll taxes withheld as well from employees/company  itself

Difference between gross pay = net pay      ↘

Social security medicare                             →    All equates to wages expense.

                (company matches)

#62 Recording Various Liabilities

  1. Purchase, credit    $80,000

Inventory               $80,000

AIP                        $80,000

  1. Wages: $40,000 not paid                       wages expenses: $40,000

Income taxes:  $13,000                    income taxes pay: $13000

Medicare taxes:   $580                   Medicare pay: $580

                        *What we actually paid employers   →  cash 26, 420

  1. Expense accrual:     $113,615

    Income tax expense      $113,615

    Income tax Payable       $113,615

  1. Sold merchandise $3,636 on account

                             Sales taxes        $180

                     AIR                      3636

                        Sales taxes              180

                        Sales revenue                  3456

  1. Employer meet SS = $580

Employer taxes expense     $580

Employer taxes payable     $580

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