Chapter 09 Reporting and Interpreting Liabilities CHAPTER 9 REPORTING AND INTERPRETING LIABILITIES HANDOUT 9 1 PAYROLL ENTRIES J W Buffet Co employees earned 350 000 in the week ended December 17 Of this 26 775 was deducted from employees pay for FICA and 62 000 was deducted for income taxes Prepare the journal entry to record the employees portion of payroll for December 17 Debit and credit the accounts affected Dec 17 Ensure the equation still balances and debits credits Assets Liabilities Stockholders Equity Prepare the journal entry to record the employer s share of FICA payroll taxes for December 17 Debit and credit the accounts affected Dec 17 McGraw Hill LLC All rights reserved No reproduction or distribution without the prior written consent of McGraw Hill LLC 9 1 Chapter 09 Reporting and Interpreting Liabilities Ensure the equation still balances and debits credits Assets Liabilities Stockholders Equity McGraw Hill LLC All rights reserved No reproduction or distribution without the prior written consent of McGraw Hill LLC 9 2 Chapter 09 Reporting and Interpreting Liabilities HANDOUT 9 2 DEFERRED REVENUE On January 1 Year 1 Charlie Rangel paid 2 000 for a two year membership to the Beam Gym Prepare the journal entry to record the receipt of cash on January 1 Year 1 Debit and credit the accounts affected Jan 1 Ensure the equation still balances and debits credits Assets Liabilities Stockholders Equity By December 31 Year 1 one half of Rangel s membership expired Prepare the adjusting journal entry Debit and credit the accounts affected Dec 31 Ensure the equation still balances and debits credits Assets Liabilities Stockholders Equity By December 31 Year 2 the remainder of the membership expired Prepare the adjusting journal entry McGraw Hill LLC All rights reserved No reproduction or distribution without the prior written consent of McGraw Hill LLC 9 3 Chapter 09 Reporting and Interpreting Liabilities Debit and credit the accounts affected Dec 31 Ensure the equation still balances and debits credits Assets Liabilities Stockholders Equity Post the entries above to the Deferred Revenue account Deferred Revenue L End Bal End Bal McGraw Hill LLC All rights reserved No reproduction or distribution without the prior written consent of McGraw Hill LLC 9 4 Chapter 09 Reporting and Interpreting Liabilities HANDOUT 9 3 NOTES PAYABLE Mumford Co borrowed a 100 000 note payable on June 1 Year 1 with 6 interest The note is due on May 31 Year 2 Prepare the journal entry to record the issuance of the note and receipt of cash on June 1 Year 1 Debit and credit the accounts affected June 1 Ensure the equation still balances and debits credits Assets Liabilities Stockholders Equity Prepare the adjusting journal entry to record the interest owed at the end of the accounting period on December 31 Year 1 Debit and credit the accounts affected Dec 31 Ensure the equation still balances and debits credits Assets Liabilities Stockholders Equity McGraw Hill LLC All rights reserved No reproduction or distribution without the prior written consent of McGraw Hill LLC 9 5 Chapter 09 Reporting and Interpreting Liabilities Prepare the journal entries to record the interest and principal payments to the lender on May 31 Year 2 Debit and credit the accounts affected May 31 Ensure the equation still balances and debits credits Assets Liabilities Stockholders Equity McGraw Hill LLC All rights reserved No reproduction or distribution without the prior written consent of McGraw Hill LLC 9 6 Chapter 09 Reporting and Interpreting Liabilities HANDOUT 9 4 PRESENT AND FUTURE VALUES 1 What is the present value of 3 000 received 5 years from now assuming 20 interest 2 What is the present value of an annuity of 50 000 received over 20 years assuming 9 interest 3 What is the future value of 12 000 invested now at 10 at maturity in 3 years 4 What is the future value of an annuity of 7 500 invested at 12 at maturity in 5 years McGraw Hill LLC All rights reserved No reproduction or distribution without the prior written consent of McGraw Hill LLC 9 7 Chapter 09 Reporting and Interpreting Liabilities McGraw Hill LLC All rights reserved No reproduction or distribution without the prior written consent of McGraw Hill LLC 9 8
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