Current Liabilities
What is a current liability?
An obligation to pay a debt that is due within one year
What are 2 examples of withholdings from an employee's paycheck?
federal income tax, state income tax, FICA - Medicare, FICA - Social Security, health insurance, dental, vision, 401k contributions, etc.
What is the entry to record the issuance of a bond at par?
Cash
Bonds Payable
What is the difference between a mortgage and a note?
What is the difference between issued stock outstanding stock?
outstanding stock is issued stock that is not owned by the company issuing the stock
What is the journal entry for a cash sale involving sales tax?
Cash X
Sales X
Sales tax payable X
What are two examples of liabilities that the employer must pay on behalf of the employee?
FICA - Medicare, FICA - Social Security, FUTA, SUTA
If the contract/stated rate is lower than the market rate on a bond, is it issued at par, a discount, or a premium?
discount
What accounts do we debit in the entries to record the payment of an installment note?
interest expense and notes payable
Does paid-in capital in excess of par have a normal debit or credit balance?
credit (it is an equity account)
What are the three categories of contingent liabilities?
Probably, reasonably possible, and remote
What account is debited in the employee withholding/payroll journal entry?
salaries expense
What does it mean for a bond to be issued at a premium?
the contract/stated rate is greater than the market rate
On January 1, 2021, Foghog borrows $60,000 from a bank to purchase equipment. It signs an 8% installment note requiring 3 annual payments of $23,282. What is the entry to record the first payment?
Interest expense 4,800 (60,000 x 8% x 1)
Notes payable 18,482 (23,282 - 4,800)
Cash 23,282
On June 5, Dillon, Inc. issued 30,000 shares of $10 par value stock for $12 per share. How do record this transaction?
Cash 360,000
Common Stock 300,000
Paid-in capital in excess of par 60,000
What must a contingent liability be in order to be accrued and recorded?
probable and estimable
What account is debited in the employer payroll tax journal entry?
Payroll tax expense
What is the entry to record the issuance of a bond at a discount?
Cash
Discount on bonds
Bonds payable
X Company issues 3,400,000 of 10% 10 year bonds on January 1st, 2021 that pay interest semiannually. They were sold at a price of 3,010,000. What is the entry to record the issuance of the bond?
Cash 3,010,000
Discount on bonds 390,000
Bonds Payable 3,400,000
Date of declaration and date of payment
On Dec. 16, 2021, a company borrows $2,000 from a bank at 12% interest for 60 days.
What entry do we make, if any, on Dec. 31, 2021? (use a 360 day year)
Interest expense 10
Interest payable 10
Employee earnings - $500, Federal income tax - $50, FICA Social Security - $31, FICA Medicare - $7, FUTA - $3, SUTA - $27
What is the journal entry for the employee's salary?
Salaries expense 412
Federal income tax 50
FICA - SS 31
FICA - Medicare 7
Do we debit or credit the premium on bonds account in the amortization/interest payment entries?
debit (credit in the issuance of bond entry)
X Company issues 3,400,000 of 10% 10 year bonds on January 1st, 2021 that pay interest semiannually. They were sold at a price of 3,010,000. What is the entry to record the first interest payment?
Interest expense 189,500
Discount on bonds 19,500
Cash 170,000
What is the entry to record the sale of treasury stock above cost?
Cash
Treasury stock
paid-in capital, treasury stock