ACCT207 Study Guide - Midterm Guide: Accounts Payable, Operating Lease, Finance Lease

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violetmuskrat44

4 Aug 2018

School

University of Delaware

Department

Accounting

Course

ACCT207

Professor

Vin Mar

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Document Summary

Current liability a debt that a company expects to pay from existing current assets or through the creation of other current liabilities within one year or the operating cycle, whichever is longer. Includes notes payable, accounting payable, unearned revenues and accrued liabilities such as, taxes, salaries and wages and interest: notes payable, written promissory note, usually requires borrower to pay interest, frequently issued to meet short term financing needs. It affects the income statement through depreciation expense. Using this rate, the method is referred to as the double declining balance method: under the units of activity method, useful life is expressed in terms of total units of production or the use expected from the asset. In a disposal by sale, the company compares the book value of the asset with the proceeds received from the sale. If the proceeds from the sale exceed the book value of the plant asset, a gain on disposal occurs.

Related Questions

Identification of Current Liabilities, Contingencies, andCommitments LO3 P 1. Listed below are common types of currentliabilities, contingencies, and commitments:

a. Accounts payable

b. Bank loans and commercial paper

c. Notes payable
d. Dividends payable

e. Sales and excise taxes payable

f. Current portion of long-term debt

g. Payroll liabilities

h. Unearned revenues

i. Income taxes payable

j. Property taxes payable

k. Promotional costs

l. Product warranty liability

m. Vacation pay liability

n. Contingent liability

o. Commitment

Required

1. For each of the following statements, identify the categoryabove to which it gives rise or with which it is most closelyassociated:

1. A company agrees to replace parts of a product ifthey fail.

2. An employee earns one day off for each monthworked.

3. A company signs a contract to lease a buildingfor five years.

4. A company puts discount coupons in thenewspaper.

5. A company agrees to pay insurance costs foremployees.

6. A portion of a mortgage on a building is due thisyear.

7. The board of directors declares a dividend.

8. A company has trade payables.

9. A company has a pending lawsuit against it.

10. A company arranges for a line of credit.

11. A company signs a note due in 60 days.

12. A company operates in a state that has a sales tax.

13. A company earns a profit that is taxable.

14. A company owns buildings that are subject to propertytaxes.

2. Of the items listed from a to o above, which oneswould you not expect to see listed on the balance sheet with adollar amount? Of those items that would be listed on the balancesheet with a dollar amount, which ones would you con- sider toinvolve the most judgment or discretion on the part ofmanagement?

tanhyena699

Listed below are several terms and phrases associated with current liabilities. Mach each List A to B

List A

1, Cash, current investments, and A/R all divided by current liabilities.

2, Payment is probable and can be reasonably estimated.

3, Gift cards

4, Long-term debt maturing within one year

5, Social Security and Medicare

6, Interest expense is recorded in the period interest is incurred rather than in the period interest is paid.

7, payment is reasonably possible and can be reasonably estimated.

8, Incurred on a notes payable.

9, Unsecured notes sold in minimum denominations of $25,000 with up to 270 days.

10, Classifying liabilities as either current or long-term helps inverstors and creditors assets this.

List B

a, Recoding a contingentliability

b, disclosure of a contingent liability

c, Interest expense

d, FICA

e, Commercial paper

f, The riskiness of a business's obligations

g, Current portion of Long-term debt

h, Unearned revenue

i, Acid=test ratio

j, Accual Accounting

chocolatewoodchuck193

The following are the transactions relating to the formation ofCardinal Mowing Services, Inc., and its first month ofoperations.

a.	The firm was organized and the initial stockholders investedcash of $780.
b.	The company borrowed $1,170 from a relative of one of theinitial stockholders; a short-term note was signed.
c.	Two zero-turn lawn mowers costing $624 each and a professionaltrimmer costing $169 were purchased for cash. The original listprice of each mower was $793, but a discount was received becausethe seller was having a sale.
d.	Gasoline, oil, and severalpackages of trash bags were purchased for cash of $117.
e.	Advertising flyers announcing the formation of the business anda newspaper ad were purchased. The cost of these items, $221, willbe paid in 30 days.
f.	During the first two weeks of operations, 47 lawns were mowed.The total revenue for this work was $917; $605 was collected incash, and the balance will be received within 30 days.
g.	Employees were paid $546 fortheir work during the first two weeks.
h.	Additional gasoline, oil, andtrash bags costing $143 were purchased for cash.
i.	In the last two weeks of thefirst month, revenues totaled $1,196, of which $488 wascollected.
j.	Employee wages for the last twoweeks totaled $663; these will be paid during the first week of thenext month.
k.	It was determined that at theend of the month the cost of the gasoline, oil, and trash bagsstill on hand was $39.
l.	Customers paid a total of $195 due from mowing services providedduring the first two weeks. The revenue for these services wasrecognized in transaction f.

Required:

Prepare the journal entries for above of the transactions.

Journal entry options include:

Accounts payable

Accounts receivable

Accumulated depreciation

Additional paid-in capital

Advertising expense

Allowance for bad debts

Apicâpreferred

Bad debts expense

Bonds payable

Buildings

Capital lease liability

Cash

Commissions expense

Commissions payable

Cost of goods sold

Current maturities of long-term debt

Deferred income taxes

Deferred tax liabilities

Depreciation expense

Discount on bonds payable

Discount on notes payable

Dividends payable

Employee contributions to pension plan

Equipment

Estimated health care expense

Estimated liability for retiree health care--current

Estimated warranty liability

Federal unemployment taxes withheld

Fica taxes withheld

Gain on sale of equipment

Goodwill

Group hospitalization insurance

Income tax expense

Income taxes payable

Income taxes withheld

Insurance expense

Interest expense

Interest income

Interest payable

Interest receivable

Interest revenue

Inventory

Keg deposits

Keg deposits revenue

Keg expense

Land

Loss of sale of equipment

Loss on early retirement of bonds

Loss on sale of machine

Machine

Medical insurance contributions

Merchandise inventory

Miscellaneous expense

Note payable

Note receivable

Paid-in capital

Parts inventory

Payroll tax expense

Payroll taxes payable

Preferred stock

Premium on bonds payable

Prepaid insurance

Prepaid rent

Real estate tax expense

Real estate taxes payable

Rent expense

Rent payable

Rent revenue

Retained earnings

Serial bonds payable

Service revenue

Subscription revenue

Supplies

Supplies expense

Supplies on hand

Ticket revenue

Treasury stock

Trucks

Unearned rent revenue

Unearned revenues

Unearned subscription revenue

Unearned ticket revenue

Utilities expense

Wages expense

Wages payable

Warranty expense

Withholding liabilities

and each journal entry is either credit ordebit.!!!!

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ACCT207 Study Guide - Midterm Guide: Accounts Payable, Operating Lease, Finance Lease

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