ACC E272 Lecture Notes - Lecture 16: Preferred Stock, Current Liability

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24 Dec 2020

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Document Summary

A cash dividends payable is an amount owed by a corporation to its stockholders. When a company receives an advance payment, it debits cash, and credits. When a company recognizes revenue, it debits the unearned revenue account, and. Retailers must collect sales taxes from customers on transfers of tangible personal property and on certain services and then must remit these taxes on the proper governmental authority. Debit cash, credit sales revenue, credit sales taxes payable. Some companies however don"t segregate the sales tax and the amount of the sale at the time of sale. Instead, the company credits both amounts in total in the sales. Later, the company debits sales revenue and credits sales tax payable for the amount of the sales taxes due. Social security taxes (paid by employer and employee) Companies should report the amount of unremitted employee and employer social security tax on gross wages paid as a current liability.

Related Questions

The following is a December 31, 2013, post-closing trial balancefor the Vosburgh Electronics Corporation.

Account Title

Cash 95,000 (Debit)

Short-term investments 210,000 (Debit)

Accounts receivable 151,000 (Debit)

Long-term investments 49,000 (Debit)

Inventories 229,000 (Debit)

Loans to employees 54,000 (Debit)

Prepaid expenses (for 2014) 30,000 (Debit)

Land 294,000 (Debit)

Building 1,690,000 (Debit)

Machinery and equipment 651,000 (Debit)

Patent 166,000 Franchise 54,000 (Debit)

Note receivable 320,000 (Debit)

Interest receivable 26,000 (Debit)

Accumulated depreciation%u2014building 634,000 (Credit)

Accumulated depreciation%u2014equipment 224,000 (Credit)

Accounts payable 203,000 (Credit)

Dividends payable (payable on 1/16/14) 24,000 (Credit)

Interest payable 30,000 (Credit)

Taxes payable 54,000(Credit)

Unearned revenue 74,000 (Credit)

Notes payable 328,000 (Credit)

Allowance for uncollectible accounts 22,000 (Credit)

Common stock 2,056,000 (Credit)

Retained earnings 370,000(Credit)

Totals 4,019,000 (Debits) 4,019,000(Credits)

Additional information:

1. The common stock represents 1.1 million shares of no parstock authorized, 640,000 shares issued and outstanding.

2. The loans to employees are due on June 30, 2014.

3. The note receivable is due in installments of $64,000,payable on each September 30. Interest is payable annually.

4. Short-term investments consist of marketable equitysecurities that the company plans to sell in 2014 and $64,000 intreasury bills purchased on December 15 of the current year thatmature on February 15, 2014. Long-term investments consist ofmarketable equity securities that the company does not plan to sellin the next year.

5. Unearned revenue represents customer payments for extendedservice contracts. 75 percent of these contracts expire in 2014,the remainder in 2015.

6. Notes payable consists of two notes, one for $114,000 due onJanuary 15, 2015, and another for $214,000 due on June 30,2016.

Required: 1. Prepare a classified balance sheet for Vosburgh atDecember 31, 2013.

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