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ACC 100 Chapter 9: Liabilities

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School
Ryerson University
Department
Accounting
Course
ACC 100
Professor
Else Grech

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Document Summary

Liabilities: define the element liabilities and provide examples of common liability accounts. Something that is owed to a third party, must be repaid in the future, and must be incurred in the past; e. g. note payable, wages payable, accounts payable, unearned revenue: define the account accounts payable. Accounts payable is a liability account that records purchases made on account that is to be paid at the end of the period. Business activities such as purchasing a good, inventory or services require the use of this account: provide all the entries necessary to demonstrate your understanding of how to use the accounts payable account. You purchase inventory on account inventory (an asset account) goes up, accounts receivable (a liability account) goes up. You purchase a weekly cleaning service on account prepaid cleaning (an asset account) goes up, account receivable (a liability account goes up: define the account unearned revenue.

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Related Questions

On January 1, 2018, the general ledger of ACME Fireworks includes the following account balances:

Accounts Debit Credit
Cash $ 25,100
Accounts Receivable 46,200
Allowance for Uncollectible Accounts $ 4,200
Inventory 20,000
Land 46,000
Equipment 15,000
Accumulated Depreciation 1,500
Accounts Payable 28,500
Notes Payable (6%, due April 1, 2019) 50,000
Common Stock 35,000
Retained Earnings 33,100
Totals $ 152,300 $ 152,300


During January 2018, the following transactions occur:

January 2. Sold gift cards totaling $8,000. The cards are redeemable for merchandise within one year of the purchase date.
January 6. Purchase additional inventory on account, $147,000.
January 15. Firework sales for the first half of the month total $135,000. All of these sales are on account. The cost of the units sold is $73,800.
January 23. Receive $125,400 from customers on accounts receivable.
January 25. Pay $90,000 to inventory suppliers on accounts payable.
January 28. Write off accounts receivable as uncollectible, $4,800.
January 30. Firework sales for the second half of the month total $143,000. Sales include $11,000 for cash and $132,000 on account. The cost of the units sold is $79,500.
January 31. Pay cash for monthly salaries, $52,000.

1. Depreciation on the equipment for the month of January is calculated using the straight-line method. At the time the equipment was purchased, the company estimated a residual value of $3,000 and a two-year service life.
2. At the end of January, $11,000 of accounts receivable are past due, and the company estimates that 30% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 5% will not be collected.
3. Accrued interest expense on notes payable for January.
4. Accrued income taxes at the end of January are $13,000.
5. By the end of January, $3,000 of the gift cards sold on January 2 have been redeemed.

Need journal entries for the following 5.

In addition to presenting the computed answers, please also discuss how you arrived at each answers the accounting problem asks. The accounting problem presents a company’s balance sheet and income statement. The Diamond Gem Cleaning and Maintenance Service Company is in the business of contracting its cleaning and maintenance services to office buildings. The balance sheet and income statement have blank lines. Determine the values that would be appropriate for each blank line. Provide a narrative of how you arrived at each value. In doing so, explain the account being valued and its relationship to the other financial data. For example, if the accounts payable line was missing, explain that you can derive its value based on knowing all the other values of the current liabilities section. Then explain what an account liability is, as well as why it would belong in the current liabilities section of the balance sheet

Please refer to the income statement and balance sheet of the Diamond Gem Cleaning and Maintenance Service Company available down:

Superior papers will mention and explain the following elements when responding to the assignment question:

Provide correct balances for the blank financial account lines.

Provide a narrative about how the values were determined.

Provide a definition and explanation of each account line that was completed

Balance sheet
ASSETS
CURRENT ASSETS
Cash 225,971
Contracts receivables [__A____]
Other assets 162,847
Total current assets 893,868
LONG TERM ASSETS
Equipment [___B____]
TOTAL ASSETS 1,180,660
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable [__C____]
Line of credit 85,000
Accrued expenses 72,495
Income tax payable 46,660
Current portion of notes payable 31,747
Deferred income taxes 78,460
Total current liabilities 571,697
LONG TERM LIABILITIES
Notes payable (long term) 172,467
TOTAL LIABILITIES 744,164
STOCKHOLDERS' EQUITY
Common stock 62,000
Additional paid-in capital 63,862
Retained Earnings [___D___]
Total stockholders' equity 436,496
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY [___E___]
Income sheet
Contract Revenues 5,146,862
Contract Costs [___F____]
Gross Profit 614,343
General and Administrative Expenses 322,356
Operating Income 291,987
Other Expense 25,770
Income Before Provision for Income Taxes 266,217
Provision for Income Taxes [__G____]
Net Income 150,767
Retained Earnings, Beginning Balance [__H____]
Net Income 150,767
Retained Earnings, Ending Balance 310,634

Three former college classmates decided to open a store nearcampus to sell wireless equipment to students. They created apublic company and issued stock to interested investors.

Required: Several transactions occurred in March.Each is described separately in this folder. For each transaction,indicate the COMPANY accounts that are affected, whether theyincrease or decrease, and the amount of the increase ordecrease.

YOU MUST FOLLOW THE INSTRUCTIONS BELOW. IF YOU DON'T, YOU MAY KNOWTHE CORRECT ENTRY BUT THE COMPUTER WILL NOT RECOGNIZE IT AND YOUWILL NOT RECEIVE CREDIT.

After each transaction description, there are several "Account"submission boxes and corresponding "Amount" submission boxes. Toindicate the accounts that you think are affected, choose them fromthe drop-down menu. But you MUST select them in the order that theyare listed in the menu. FOR EXAMPLE, if you think that Cash andInventory are affected by a particular transaction, you must recordthe Cash impact first and the Inventory impact second because thatis the order that they are listed in the drop-down menu. If yourecord the Inventory impact first and the Cash impact second, evenif they are the correct accounts and even if you have the correctdollar amounts, your answer will be considered wrong.

When you record the dollar amounts, be sure to use a minus signto indicate a decrease in the account. You don't need to use a plussign to indicate an increase.

There are always more "Account" and "Amount" submission boxesavailable than are necessary. When you have indicated all theaccounts that are affected by the transaction, select "Leave Blank"from the drop-down menu for EACH of the remaining "Account"submission boxes (you can leave the "Amount" boxes blank).

For transactions 3, 4, 5, and 8, you are given additionalinstructions. Read them carefully.

Transaction 9
Cash dividends totalling $4,800 were declared and paid tostockholders on March 31.

Options for account: Cash, accounts receivable, inventory,prepaid rent, fixtures and equipment, accounts payable, interestpayable, wages payable, notes payable, paid in capital, retainedearnings, leave blank

Account: Dollar Amount:

Account: Dollar Amount:

Account: Dollar Amount:

Account: Dollar Amount

Account: Dollar Amount