文档介绍：CHAPTER 11
LIABILITIES
STUDY OBJECTIVES
After studying this chapter, you should understand:
酒店设计
Key features of a current liability:
It is expected to be paid from existing current assets or through the creation of other current liabilities
It will be paid within one year or the
operating cycle, whichever is longer.
STUDY OBJECTIVE 1
TYPES OF CURRENT LIABILITIES
Notes Payable
Accounts Payable
Unearned Revenues
Accrued Liabilities
STUDY OBJECTIVE 2
NOTES PAYABLE
Key features of a note payable:
Promissory note
Interest
Notes due within a year
are current liabilities
Assume First National Bank agrees to
lend $100,000 on March 1, 2006, if
Cole Williams Co. 12%, 4-month note.
Date
Account Titles
Debit
Credit
General Journal
March 1 Cash 100,000
Notes Payable 100,000
NOTES PAYABLE
ISSUANCE DATE
Assets received = face value of note
$100,000 x 12% x 4/12 = $4,000
Face Value
of Note
Annual
Interest
Rate
Time in
Terms
of One Year
Interest
Using the Cole Williams Co. data:
INTEREST FORMULA
If the loan term is expressed in days,
use the number of days divided by 365.
If loan term is expressed in months,
use the number of months divided by 12.
If Cole Williams Co. prepares financial statements semiannually, an adjusting entry is required to recognize interest expense and interest payable of $4,000 at June 30.
Date
Account Titles
Debit
Credit
General Journal
June 30 Interest Expense 4,000
Interest Payable 4,000
NOTES PAYABLE
INTEREST ACCRUAL
Date
Account Titles
Debit
Credit
General Journal
July 1 Notes Payable 100,000
Interest Payable 4,000
Cash 104,000
NOTES PAYABLE
MATURITY DATE
When the loan is paid, the FACE VALUE is
debited, any interest accrued is removed,
and cash is decreased by bined amount.
REVIEW QUESTION
INTEREST ACCRUAL
Shari pany borrows $88,500 on September 1, 2006
From Egg Harbor State Bank by signing a one year, 12% note.
What is the accrued interest at December 31, 2006?
Answer:
$88,500 x 12%