@ 2012, Cengage Learning Current Liabilities and Payroll LO 1a – Recording Notes Payable.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 9-1 Notes Payable.
23
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 9-1 LESSON 9-1 Notes Payable
Transcript of CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 9-1 Notes Payable.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 9-1LESSON 9-1
Notes Payable
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
2
LESSON 9-1
BORROWING MONEY BORROWING MONEY WITH A NOTE PAYABLEWITH A NOTE PAYABLE page 261
March 2. Signed a 180-day, 10% note, $1,500.00. R143.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
3
LESSON 9-1
Time Number of DaysMarch 2 through 31 29 (31–2=29)April 30May 31June 30July 31August 1 through 29 29 (Maturity date: Aug. 29)
180 days
1. Compute the number of days in the first month.
2. Add the number of days in subsequent months until the total equals the number of days of the note.
CALCULATING THE MATURITY DATECALCULATING THE MATURITY DATE page 262
11
22
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
4
LESSON 9-1
Principal Interest Rate
Time as Fraction of
Year
=Interest for Fraction of
Year
× ×
CALCULATING INTERESTCALCULATING INTEREST page 262
$1,500.00 10%180360
= $75.00× ×
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
5
LESSON 9-1
1. Principal of note.
3. Maturity value of note.
2. Interest of note.
PAYING A NOTE PAYABLEPAYING A NOTE PAYABLE page 263
11
2233
August 29. Paid cash for the maturity value of the Mar. 2 note: principal, $1,500, plus interest, $75.00; total, $1,575.00. Check No. 359.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
6
LESSON 9-1
TERMS REVIEWTERMS REVIEW
promissory note notes payable date of a note principal of a note maturity date of a note interest interest rate of a note interest expense maturity value
page 265
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 9-2LESSON 9-2
Prepaid Expenses
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
8
LESSON 9-2
1. Debit the expense account.
2. Credit the asset account.
SUPPLIES INITIALLY RECORDED AS SUPPLIES INITIALLY RECORDED AS AN ASSETAN ASSET page 267
11
22
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
9
LESSON 9-2
1. Debit the asset account.
2. Credit the expense account.
SUPPLIES INITIALLY RECORDED AS SUPPLIES INITIALLY RECORDED AS AN EXPENSEAN EXPENSE page 268
11
22
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
10
LESSON 9-2
1. Debit the expense account.
2. Credit the asset account.
REVERSING ENTRY—SUPPLIES REVERSING ENTRY—SUPPLIES INITIALLY RECORDED AS AN EXPENSEINITIALLY RECORDED AS AN EXPENSE page 269
11
22
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
11
LESSON 9-2
1. Debit the asset account.
2. Credit the expense account.
PREPAID INSURANCE INITIALLY PREPAID INSURANCE INITIALLY RECORDED AS AN EXPENSERECORDED AS AN EXPENSE page 270
11
22
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
12
LESSON 9-2
1. Debit the expense account.
2. Credit the asset account.
REVERSING ENTRY FOR PREPAID REVERSING ENTRY FOR PREPAID INSURANCEINSURANCE page 270
11
22
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
13
LESSON 9-2
TERMS REVIEWTERMS REVIEW
prepaid expenses reversing entry
page 271
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 9-3LESSON 9-3
Accrued Expenses
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
15
LESSON 9-3
PrincipalInterest Rate
Time as Fraction of Year
Interest for 15 Days
=
1. Determine the amount of accrued interest.
2. Debit the expense account.
3. Credit the liability account.
JOURNALIZING ACCRUED JOURNALIZING ACCRUED INTEREST EXPENSEINTEREST EXPENSE page 272
11
22
33
$7,500.00 10% = $31.2515
360
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
16
LESSON 9-3
1. Debit the liability account.
2. Credit the expense account.
REVERSING ENTRY FOR REVERSING ENTRY FOR ACCRUED INTERESTACCRUED INTEREST page 273
11
22
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
17
LESSON 9-3
Notes Payable
2/13 7,500.00 1/1 Bal. 7,500.00
Interest Expense
2/13 125.00 1/1 Bal. 31.25
PrincipalInterest Rate
Time as Fraction of Year
Total Interest Due
=
1. Calculate total interest due at maturity.
2. Debit Notes Payable, $7,500.00.
3. Debit Interest Expense, $125.00. (Credit Cash, $7,625.00.)
4. Determine the interest expense for the current period.
PAYMENT OF NOTE AT MATURITYPAYMENT OF NOTE AT MATURITY page 273
11
22
33
$7,500.00 10% = $125.0060360
Interest Expense Recorded in
Previous Period
Total Interest Expense for the
Note
Interest Expense Recorded in
Current Period– =
$125.00 – = $93.75$31.25 44
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
18
LESSON 9-3
1. Debit the expense accounts.
2. Credit the liability accounts.
JOURNALIZING ACCRUED JOURNALIZING ACCRUED SALARY EXPENSESALARY EXPENSE page 274
11
22
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
19
LESSON 9-3
1. Debit the liability accounts.
2. Credit the expense accounts.
REVERSING ENTRY FOR REVERSING ENTRY FOR ACCRUED SALARYACCRUED SALARY page 275
11
22
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
20
LESSON 9-3
1. Debit the expense account.
2. Credit the liability accounts.
JOURNALIZING ACCRUED EMPLOYER JOURNALIZING ACCRUED EMPLOYER PAYROLL TAXES EXPENSEPAYROLL TAXES EXPENSE page 276
11
22
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
21
LESSON 9-3
1. Debit the liability accounts.
2. Credit the expense account.
REVERSING ENTRY FOR ACCRUED REVERSING ENTRY FOR ACCRUED EMPLOYER PAYROLL TAXESEMPLOYER PAYROLL TAXES page 276
11
22
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
22
LESSON 9-3
1. Debit the expense account.
2. Credit the liability account.
JOURNALIZING ACCRUED FEDERAL JOURNALIZING ACCRUED FEDERAL INCOME TAX EXPENSEINCOME TAX EXPENSE page 277
11
22
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
23
LESSON 9-3
TERM REVIEWTERM REVIEW
accrued expenses
page 279
