Accounting Chapter 9 Exam 3

Must sometimes be estimated

1-Current Liabilities 2-Long term liabilities

Expected to be paid within one year or the companys operating cycle, whichever is longer

Expected not to be paid within one year or the companys operating cycle, whichever is longer

Uncertainly in whom to pay, when to pay and uncertainly in how much to pay

Is a potential obligation that depends on a future event arising out of a past transaction or event

Are amounts owed to suppliers for products and/or services purchased on credit.

Debit cash Credit Unearned Revenue

Should be recorded if payment for damages is probable and the amount can be reasonably estimated

Debit cash $75000 Credit notes payable $75000

Debit note payable $75000 Debit Interest expense $1500 Credit cash $76500 Formula for maturity interest is $ 75000 TIMES 12% TIMES 60 DIVIDE BY 360= $1500

Note payable ($75000) TIMES percentage(12%) TIMES days of note payable (60) divide by 360

Debit Warranty Exp 100000 Credit Estimated Warranty Exp 100000 Formula to calculated 400 TIMES 250= $100000

Debit Estimated warranty Liab 65000 Credit cash 65000

Debit- Payroll taxes Expense Credit- Fica Social Security Taxes Payable Credit - Fica Medicare Credit- State Unemployment Credit - Federal Unemployment

Debit- Salaries Expense Credit - Fica Social Security Credit - Fica Medicare Credit - Employee Federal Income Taxes Credit - Employee Medical Insurance Credit - Employee Union Dues Credit - Accrued salaries payable