大三下学习大二上

1、Current Liabilities and Payroll11Learning Objective 13-1Describe the nature of the adjusting process.Learning Objective 13-1Describe the nature of the adjusting process.9-2Insert Chapter ObjectivesCurrent Liabilities and Payroll1Define and illustrate current liabilities related to accounts payable,

2、current portion of long-term debt, and notes payable.2Determine employer liabilities for payroll, including liabilities arising from employer earnings and deductions from savings.After studying this chapter, you should be able to:11-23Describe payroll accounting systems that use a payroll register,

3、employee earnings records, and a general journal.4Journalize entries for employee fringe benefits, including vacation pay and pensions.5Describe the accounting treatment for contingent liabilities and journalize entries for product warranties.11-3Current Liabilities and Payroll (continued)Describe a

4、nd illustrate current liabilities related to accounts payable, current portion of long-term debt, and notes payable.111-4Liabilities that are to be paid out of current assets and are due within a short time, usually within one year, are called current liabilities.Accounts payableCurrent portion of l

5、ong-term debtNotes payable1Accounts payable arise from purchasing goods or services for use in a companys operations or for purchasing merchandise for resale.11Accounts Payable as a Percent of Total Current LiabilitiesExhibit 1Current Portion of Long-Term DebtLong-term liabilities are often paid bac

6、k in periodic payments, called installments. Installments that are due within the coming year must be classified as a current liability. 1The total amount of the installments due after the coming year is classified as a long-term liability.1A firm issues a 90-day, 12% note for $1,000, dated August 1

7、, 2008 to Murray Co. for a $1,000 overdue account.Short-Term Notes Payable1On October 30, when the note matures, the firm pays the $1,000 principal plus $30 interest ($1,000 12% 90/360).1Interest Expense appears on the e statement as an “Other Expense.”On May 1, Bowden Co. (borrower) purchased merch

8、andise on account from Coker Co. (creditor), $10,000, 2/10, n/30. The merchandise cost Coker Co. $7,500.1DescriptionDebitCreditBowden Co. (Borrower)Mdse. Inventory10,000Accounts Payable10,000Coker Co. (Creditor)DescriptionDebitCreditAccounts Receivable10,000Sales10,000Cost of Mdse. Sold7,500Mdse. In

9、ventory7,5001On May 31, Bowden Co. issued a 60-day, 12% note for $10,000 to Coker Co. on account.Accounts Payable10,000Notes Payable10,000DescriptionDebitCreditBowden Co. (Borrower)Notes Receivable10,000Accounts Receivable10,000Coker Co. (Creditor)DescriptionDebitCredit1On July 30, Bowden Co. paid C

10、oker Co. the amount due on the note of May 31. Interest: $10,000 12% 60/360.Notes Payable10,000Interest Expense200Cash10,200DescriptionDebitCreditBowden Co. (Borrower)Cash10,200Interest Revenue 200Notes Receivable10,000Coker Co. (Creditor)DescriptionDebitCredit1On September 19, Iceburg Company issue

11、s a $4,000, 90-day, 15% note to First National Bank.1On the due date of the note (December 18), Iceburg Company owes $4,000 plus interest of $150 ($4,000 15% 90/360).1Discounting a NoteA discounted note has the following characteristics:The creditor (lender) requires an interest rate, called the dis

12、count rate.Interest, called the discount, is computed on the face amount of the note.The debtor (borrower) receives the face amount of the note less the discount, called the proceeds.The debtor pays the face amount of the note on the due date.1On August 10, Cary Company issues a $20,000, 90-day note

13、 to Rock Company in exchange for inventory. Rock discounts the note at 15%.1ProceedsDiscount: $20,000 .15 90/360Discount rateOn November 8 the note is paid in full.1The amount paid is the face amount of the note. Example Exercise 10-2Proceeds from Notes Payable1On July 1, Bella Salon Company issued

14、a 60-day note with a face amount of $60,000 to Delilah Hair Product Company for merchandise inventory. Example Exercise 11-1For Practice: PE 11-1A, PE 11-1B Follow My Example 6-1 Follow My Example 11-1a.$60,00011-21Determine the proceeds of the note, assuming the note carries an interest rate of 6%.

15、Determine the proceeds of the note, assuming the note is discounted at 6%.b.$59,400 $60,000 ($60,000 6% 60/360)Determine employer liabilities for payroll, including liabilities arising from employee earnings and deductions from earnings.211-22Payroll refers to the amount paid to employees for the se

16、rvices they provide during a period. A companys payroll is important for the following reasons:Employees are sensitive to payroll errors and irregularities.Good employee morale requires payroll to be paid timely and accurately.Payroll is subject to various federal and state regulations.Payroll and r

17、elated payroll taxes significantly affect the net e of most companies.2Salary usually refers to payment for managerial and administrative services. Salary is normally expressed in terms of a month or a year. 2Wages usually refers to payment for employee manual labor. The rate of wages is normally st

18、ated on an hourly or weekly basis.2John T. McGrath is employed by McDermott Supply Co. at the rate of $34 per hour, plus 1.5 times the normal hourly rate for hours over 40 per week. For the week ended December 27, McGrath worked 42 hours.Earnings at regular rate (40 $34)$1,360Earnings at overtime ra

19、te (2 $51) 102Total earnings$1,462Computing Employees Earnings2The total earnings of an employee for a payroll period are called gross pay. From this is subtracted one or more deductions to arrive at the net pay. Net pay is the amount that the employer must pay the employee.22Employees Withholding A

20、llowance Certificate (W-4 Form)Exhibit 2McGrath made $1,462 for the week ending December 27. Since McGraths W-4 (Slide 28) claims one withholding allowance, $67 (the assumed standard withholding allowance) is deducted from his gross pay to arrive at $1,395 ($1,462 $67). Deductions from Employees Ear

21、nings: McGrath Example22Wage Bracket Withholding TableExhibit 3Table for Percentage Method of Withholding WEEKLY Payroll PeriodSource: Publication 15, Employers Tax Guide, Internal Revenue Service, 2008McGrath Example (continued)Initial withholding (Slide 30)$ 82.95Plus 25% ($1,395 $653) 185.50Total

22、 federal e taxes withheld$268.452 Example Exercise 11-22Karen Dunns weekly gross earnings for the present week were $2,250. Dunn has two exemptions. Using the wage bracket withholding table in Exhibit 3 (Slide 30) with a $67 standard withholding allowance for each exemption, what is Dunns federal e

23、tax withholding?Federal e Tax Withholding11-32Example Exercise 11-2 (continued)211-33For Practice: PE 11-2A, PE 11-2BTotal wage payment$2,250One allowance (provided by IRS)$67Multiplied by allowances claimed on W-4 2 134Amount subject to withholding$2,116Initial withholding from wage bracket in Exh.

24、 3$302.96Plus additional withholding: 28% of excess over $1,533 163.24*Federal e tax withholding$466.20*28% ($2,116 $1,533) Follow My Example 11-2FICA TaxThe amount of FICA tax withheld is the employees contribution to two federal programs. The first program, called social security, is for old age,

25、survivors, and disability insurance (OASDI). The second program, called Medicare, provides health insurance for senior citizens.2John T. Mcgraths annual earnings prior to the payroll period ending on December 27 total $99,038.Earnings subject to 6% social security tax ($100,000 $99,038)$ 962Social s

26、ecurity tax rate 6%Social security tax$57.72Earnings subject to 1.5% Medicare tax$1,462Medicare tax rate 1.5%Medicare tax 21.93Total FICA tax$79.65John T. McGraths FICA Tax2John T. McGraths Net PayGross earnings for the week$1,462.00 Deductions:Social security tax (Slide 35)$ 57.72Medicare tax (Slid

27、e 35)21.93Federal e tax (Slide 31)268.45Retirement savings20.00United Way 5.00 Total deductions 373.10Net pay$1,088.902 Example Exercise 11-32Karen Dunns weekly gross earnings for the week ending Dec. 3rd were $2,250, and her federal e tax withholding was $466.19. Prior to this week Dunn had earned

28、$98,000 for the year. Assuming the social security rate is 6% on the first $100,000 of annual earnings and Medicare is 1.5% of all earnings, what is Dunns net pay?Employee Net Pay11-37Example Exercise 11-3 (continued)2Total wage payment$2,250.00Less: Federal e tax withholding466.19Earnings subject t

29、o social securitytax ($100,000 $98,000)$2,000Social security tax rate 6%Social security tax120.00Medicare tax ($2,250 1.5%) 33.75Net pay$1,630.0611-38For Practice: PE 11-3A, PE 11-3B Follow My Example 11-3Liability for Employers Payroll TaxesEmployers are subject to the following payroll taxes for a

30、mounts paid their employees:FICA taxFederal Unemployment Compensation Tax (FUTA)State Unemployment Compensation Tax (SUTA)2Employers Federal Payroll TaxesEmployers are required to contribute to the social security and Medicare programs for each employee. The employer must match the employees contrib

31、ution to each program.2A FUTA tax of 6.2% is levied on employers only to provide for temporary unemployment to those who e unemployed as a result of layoffs due to economic causes beyond their control. This tax applies to only the first $7,000 of the earnings of each covered employee during a calend

32、ar year.Employers Federal Unemployment Taxes2Employers State Unemployment TaxesThis employer tax also provides temporary payments to those who e unemployed. The FUTA and SUTA programs are closely coordinated, with the states distributing the unemployment checks. SUTA tax rates and earnings subject t

33、o tax vary by state.22Responsibility for Tax PaymentsExhibit 4Describe payroll accounting systems that use a payroll register, employee earnings records, and a general journal.311-44Payroll systems should be designed to:Pay employees accurately and timely.Meet regulatory requirements of federal, sta

34、te, and local agencies.Provide useful data for management decision-making needs.3Payroll RegisterThe payroll register is a multicolumn report used for summarizing the data for each payroll period. The right hand columns of the payroll register indicate the accounts debited for the payroll expense. T

35、hese columns are often referred to as the payroll distribution. 33Payroll Register (left side)Exhibit 533Payroll Register (right side)Exhibit 5The entry based on the payroll register in Exhibit 5 (Slides 47 and 48) is shown below.3 Example Exercise 10-2Journalize Period Payroll3 Example Exercise 11-

36、4For Practice: PE 11-4A, PE 11-4B11-50The payroll register of Chen Engineering Services indicates $900 of social security withheld and $225 of Medicare tax withheld on total salaries of $15,000 for the period. Federal withholding for the period totaled $2,925.Provide the journal entry for the period

37、s payroll. Follow My Example 6-1 Follow My Example 11-4Salaries Expense15,000Social Security Tax Payable.900Medicare Tax Payable.225Federal Withholding Tax Payable2,925Salaries Payable.10,950Recording and Paying Payroll TaxesEverson Companys fiscal year ends on April 30. Assume the following payroll

38、 data on December 31, 2009:Wages owed employees on Dec. 31$26,000Wages subject to payroll taxes:Social security tax (6.0%)$18,000Medicare taxes (1.5%)26,000State (5.4%) and federal (0.8%) unemployment compensation tax1,0003If the payroll is paid on December 31, the payroll taxes are computed as foll

39、ows:Social security$1,080($18,000 6.0%)Medicare tax390($26,000 1.5%)State unemployment compensation tax (SUTA)54($1,000 5.4%)Federal unemploymentcompensation tax (FUTA) 8($1,000 0.8%) Total payroll taxes$1,5323If the payroll is paid on January 2, the entire $26,000 is subject to all payroll taxes, a

40、s computed as follows:Social security$1,560($26,000 6.0%)Medicare tax390($26,000 1.5%)State unemployment compensation tax (SUTA)1,404($26,000 5.4%)Federal unemploymentcompensation tax (FUTA) 208($26,000 0.8%) Total payroll taxes$3,5623Assume that in Exhibit 5 (Slides 47 and 48) the earnings subject

41、to state and federal unemployment compensation taxes are $2,710. In addition, assume a SUTA rate of 5.4% and a FUTA rate of 0.8%. What is the rate for each of the following? Social security?Medicare tax?State unemployment compensation tax (SUTA)?Federal unemploymentcompensation tax (FUTA) ? Total pa

42、yroll taxes$?Click to go to Exhibit 5. To return to this slide, type “54” and press “Enter.”Left click for answers$ 643.07 (from Exhibit 5)146.34($2,710 5.4%)208.53(from Exhibit 5)21.68($2,710 0.8%)$1,019.6233Journal Entry to Record Weekly Payroll Example Exercise 11-53Journalize Payroll Taxes11-56T

43、he payroll register of Chen Engineering Services indicates $900 of social security withheld and $225 of Medicare tax withheld on total salaries of $15,000 for the period. Assume earnings subject to state and federal unemployment compensation taxes are $5,250, at the federal rate of 0.8% and state ta

44、x of 5.4%.Provide the journal entry to record the payroll tax expense for the period.Example Exercise 11-5 (continued)3Payroll Tax Expense.1,450.50Social Security Tax Payable.900.00Medicare Tax Payable225.00State Unemployment Tax Payable ($5,250 5.4%).283.50Federal Unemployment Tax Payable ($5,250 0

45、.8%).42.0011-57For Practice: PE 11-5A, PE11-5B Follow My Example 11-5A detailed payroll record is maintained for each employee. This record is called an employees earnings record. At the end of each pay period, payroll checks are prepared. Each check includes a detachable statement showing the detai

46、ls of how the net pay was computed.Employees Earnings Record33Employees Earnings Record (left side)Exhibit 63Employees Earnings Record (right side)Exhibit 63W-2 Wage and Tax Statement3Payroll CheckExhibit 73Flow of Data in a Payroll SystemExhibit 8Internal Controls for Payroll SystemsIf a check-sign

47、ing machine is used, blank payroll checks and access to the machine should be restricted to prevent their theft. The hiring and firing of employees should be properly authorized and approved in writing. All changes in pay rates should be properly authorized and approved in writing. (continued)3Payro

48、ll checks should be distributed by someone other than employee supervisors. A special payroll bank account should be used.3Employees should be observed when arriving for work to verify they are “checking in” for work only once and only for themselves.Journalize entries for employee fringe benefits,

49、including vacation pay, and pensions.411-66Many companies provide their employees a variety of benefits in addition to salary and wages earned. Such fringe benefits may take many forms, including vacations, medical, and retirement benefits.44Benefit Dollars as a Percent of Payroll CostsExhibit 9Most

50、 employers grant vacation rights, sometimes called compensated absences, to their employees. The estimated vacation pay for the year ending December 31 is $325,000.Vacation Pay4325,000325,000A pension represents a cash payment to retired employees. Rights to pension payments are earned by employees

51、during their working years, based on the pension plan established by the employer.4PensionIn a defined contribution plan, a fixed amount of money is invested on the employees behalf during the employees working years. 4Defined Contribution PlanThe pension plan of Heaven Scent Perfumes Company requir

52、es an employer contribution of 10% of employee monthly salaries to an employee 401k plan. December salaries totaled $500,000, so $50,000 was sent to the employees plan administrator.4The entry to record the payment to the plan administrator is shown below:4Defined Benefit PlanIn a defined benefit pl

53、an, employers promise employees a fixed annual pension benefit at retirement, based on years of service and compensation levels. 4Assume that Hinkle Co. requires an annual pension cost of $80,000 based on an estimate of the future benefit obligation. Hinkle pays $60,000 into the pension fund.4Postre

54、tirement Benefits Other Than PensionsEmployees may earn rights to other postretirement benefits, such as dental care, eye care, medical care, life insurance, tuition assistance, tax services, and legal services.4 Example Exercise 10-2Vacation Pay and Pension Benefits4Manfield Service, Inc. provides

55、their employees vacation benefits and a defined contribution pension plan. Employees earned vacation pay of $44,000 for the period. The pension plan requires a contribution to the plan administrator equal to 8% of employee salaries. Salaries were $450,000 during the period.Provide the journal entry

56、for (a) the vacation pay and (b) pension benefit. Example Exercise 11-611-77Example Exercise 11-6 (continued)4a. Vacation Pay Expense.44,000Vacation Pay Payable.44,000Vacation pay accruedfor the period.b. Pension Expense.36,000Cash.36,000Pension contribution, 8%of $450,000 salary.11-78For Practice:

57、PE 11-6A, PE 11-6B Follow My Example 11-6Describe the accounting treatment for contingent liabilities and journalize entries for product warranties.511-79Some liabilities may arise from past transactions if certain events occur in the future. These potential obligations are called contingent liabilities.5Contingent LiabilitiesThe accounting for contingent liabilities depends on the following two factors:Likelihood of occurring: Probable, reasonably possible, or remote.Measurement: Estimable or not estimable.5During June, a company sells a product for $60,000 on which there is