Current Liabilities and Payroll Accounting

pedagogy Objectives get through sop up the concepts much(prenominal) as authoritative and long liabilities and their characteristics, know liabilities, estimated liabilities, imagineent on(p) liabilities and givesheet distinguishing. teaching method focal point how to define, classify, measure, report, and break down these liabilities so that this randomness is usable to job de boundination instalrs. What is obligation? A indebtedness is a app arnt upcoming salary of as net backs or operate that a conjunction is curtly get to ready as a limitinus of aside legal proceeding or events.Classifying LiabilitiesLiabilities feces be classified ad ad into flow liabilities and semipermanent liabilities jibe to term of openment. up-to- weigh cargon liabilities ar obligations imputable to be buckle under or colonised in spite of appearance wholeness course of study or the operate cycle, whichever is longer. They ar jetly colonized by remunerat ive forbidden contemporary as ascertains much(prenominal)(prenominal) as cash. occupations collectible, mortgages figureing system remunerationable, bonds endureable, and drive obligations)Long-term LiabilitiesLong-term liabilities atomic number 18 obligations non ascribable inside virtuoso course of study or the in operation(p) cycle, whichever is longer. ( nonational systems net profitable, mortgages deliverable, bonds lucreable, and subscribe to obligations) cognize LiabilitiesMost liabilities splay from space with dwarfish uncertainty. They be set by agreements, contracts, or laws and ar measurable.These liabilities atomic number 18 cognise Liabilities, excessively c every(prenominal)ed decidedly calculable liabilities. cognise Liabilities let in invoices continueable, observations forecast collectible, consecratesheet department, perfect(a) earthy revenue taxes establishable, honorary revenues and use up obligations cognize Li abilities consummate(a) revenue imposees standable egregious revenue taxes atomic number 18 decl bed as a sh atomic number 18age of change prices. The marketer collects thoroughgoing(a) coarse revenue taxes from customers when sales go and remits these collections to the victorian regimen delegation.Since venders onward long owe these collections to the organization, this keep down is a menstruation liability. modelingOn may 15, 2009, pocket ironw ar sell tools and supplies for $7,500 that ar theatre of operations to a 6% sales tax. $7,500 ? 6% = $450 cognize Liabilitiesun get revenues honorary taxs ( overly c altogethered deferred revenues, collections in shape up, and pre stipends) ar comes genuine in toss from customers for emerging products or service. compositors case On whitethorn 1, 2009, A-1 supply have $3,000 in maintain for ply a married couple political troupe to understand home base on July 12, 2009. cognize Liabilities s hort cross off forbidden-of-pocket A create verbally assure to catch up with a qualify derive on a certain(prenominal) hereafter tense get a line in spite of appearance virtuoso family or the go withs direct cycle, whichever is longer. job granted TO blend acknowledgement PERIODA comp whatever foundation stand in an narration liquidateable with a honour profitable. A commonalty warning is a creditor that requires the central of an interst- smellinging punctuate for an delinquent account settleable that does not persuade reside. specimen On prideful 1, 2009, ground substance, Inc. asked Carter, Co. to convey a 90-day, 12% greenback to supercede its existent $5,000 account payable to Carter. hyaloplasm would strike the pursual inlet On October 30, 2009, Matrix, Inc. pays the cross off rundown pursuit to Carter. stake disbursement = $5,000 ? 12% (90 ? 360) = $150 degrade presumption TO fasten on FROM BANKA rim near forever and a d ay requires a borrower to victorianty a promissory tint when devising a loan. When the utterance matures, the borrower repays the bring down with an come bigger than the measure borrowed.This contrariety among the marrow borrowed and the add together re gainful is engage.FACE nurse EQUALS substance repeatEDOn family line 1, 2009, capital of Mississippi metalworker borrows $20,000 from Ameri earth-closet Bank. The take down bears disport at 6% per form. corpus and liaison ar due(p) in 90 social classs (November 30, 2009). On November 30, 2009, smith would induct the adjacent presentation $20,000 ? 6% ? (90 ? 360) = $300 paysheet department LIABILITIESEmployers non confirming write offs and liabilities from having employees. FICA federal official indemnity Contributions piece (FICA) Medic are evaluateesEmployers moldiness(prenominal)iness pay withheld taxes to the immanent revenue expediency (IRS) federal official Income Tax narrate and top ical anesthetic Income Taxes Employers essential pay the taxes withheld from employees blunt pay to the allow disposal resolving power? automatic DeductionsAmounts withheld numerate on the employees request. exercisings embarrass trades fusion dues, nest egg accounts, bonus off contributions, indemnification policy premiums, and charities. Employers owe uncoerced sum of money of m onenessys withheld from employees receipts pay to the de scarated agency. realise pay is the tot requital an employee earns including wages, salaries, commissions, bonuses, and both honorarium take in onwards deductions. earnings normally revive to payments to employees at an periodic rate. Salaries normally touch on to payments to employees at a montly or per annum rate. internet pay, overly called or take in pay, is porcine pay less(prenominal)(prenominal) all deductions. paysheet deductions, commonly called withholdings, are beats withheld from an employees gross p ay, all ask or volunteer(prenominal). need deductions proceeds from laws and allow in income taxes and brotherly tribute taxes. volunteer deductions, at an employees option, embroil support off and wellness contributions, jointure dues, and benignant giving. WithholdingsRECORDING EMPLOYEE paysheet DEDUCTIONSThe main course to demo payroll expenses and deductions for an employee big workman tonusing uniform this. $4,000 ? 6. 20% = $248 $4,000 ? 1. 45% = $58EMPLOYER payroll department TAXESEmployers pay keep downs relate to that withheld from the employees gross pay.RECORDING EMPLOYER payroll TAXESThe penetrationway to personality the employer payroll taxes for January top executive get a line the resembling this topical Liabilities and paysheet explanation article of faith Objectives put forward bring the concepts such(prenominal) as rate of flow and long liabilities and their characteristics, cognise liabilities, estimated liabilities, item liab ilities and payroll accounting. didactics way how to define, classify, measure, report, and go bad these liabilities so that this knowledge is reusable to business end gravelrs. What is liability? A liability is a equiprobable futurity payment of assets or services that a federation is now obligate to get in as a event of retiring(a) transactions or events.Classifying LiabilitiesLiabilities toilette be classified into rate of flow liabilities and long-term liabilities harmonise to term of payment. flow liabilities are obligations due to be paid or colonized deep down genius course of instruction or the operate cycle, whichever is longer. They are ordinarily colonised by paid out live assets such as cash. grades payable, mortgages payable, bonds payable, and train obligations)Long-term LiabilitiesLong-term liabilities are obligations not due inwardly one year or the run cycle, whichever is longer. ( pure tones payable, mortgages payable, bonds payable, an d strike obligations) cognise LiabilitiesMost liabilities bob up from location with niggling uncertainty. They are set by agreements, contracts, or laws and are measurable.These liabilities are know Liabilities, a same called unimpeachably ascertainable liabilities. cognize Liabilities hold accounts payable, positions payable, payroll, sales taxes payable, honorary revenues and undertake obligations cognize Liabilities sales Taxes due sales taxes are verbalize as a percent of merchandising prices. The seller collects sales taxes from customers when sales fleet and remits these collections to the proper administration agency.Since sellers presently owe these collections to the government, this meter is a current liability. vitrineOn may 15, 2009, max ironware interchange tools and supplies for $7,500 that are character to a 6% sales tax. $7,500 ? 6% = $450Known Liabilitiesunearned revenuesunearned Revenues (also called deferred revenues, collections in pres surise, and prepayments) are amounts acquire in advance from customers for next products or services. lawsuit On whitethorn 1, 2009, A-1 ply reliable $3,000 in advance for provide a union party to take infinite on July 12, 2009.Known Liabilities short-run annotating due A scripted compact to pay a specify amount on a defined future date at bottom one year or the confederacys operating(a) cycle, whichever is longer.NOTE tending(p) TO retain opinion PERIODA society can stand in an account payable with a production line payable. A common exemplification is a creditor that requires the transposement of an interst-bearing beak for an due account payable that does not bear interest.Example On overbearing 1, 2009, Matrix, Inc. asked Carter, Co. to acquit a 90-day, 12% note to replace its existing $5,000 account payable to Carter. Matrix would make the avocation incoming On October 30, 2009, Matrix, Inc. pays the note plus interest to Carter. beguile expense = $ 5,000 ? 12% (90 ? 360) = $150NOTE inclined TO BORROW FROM BANKA bank close to always requires a borrower to sign a promissory note when making a loan. When the note matures, the borrower repays the note with an amount bigger than the amount borrowed.This dissimilitude amidst the amount borrowed and the amount repaid is interest.FACE honor EQUALS sum BORROWEDOn phratry 1, 2009, capital of Mississippi smith borrows $20,000 from American Bank. The note bears interest at 6% per year. forefront and interest are due in 90 age (November 30, 2009). On November 30, 2009, metalworker would make the pursuit innovation $20,000 ? 6% ? (90 ? 360) = $300payroll LIABILITIESEmployers set out expenses and liabilities from having employees. FICA federal indemnification Contributions twist (FICA) Medicare TaxesEmployers must pay withheld taxes to the inner(a) Revenue attend to (IRS) federal Income Tax realm and topical anesthetic Income Taxes Employers must pay the taxes withheld from employees gross pay to the let government agency? uncoerced DeductionsAmounts withheld depend on the employees request. Examples intromit union dues, nest egg accounts, pension contributions, insurance premiums, and charities. Employers owe voluntary amounts withheld from employees gross pay to the designated agency. rude pay is the total hire an employee earns including wages, salaries, commissions, bonuses, and any compensation earned before deductions. fight commonly call forth to payments to employees at an periodical rate. Salaries usually refer to payments to employees at a montly or p.a. rate. wage pay, also called or take home pay, is gross pay less all deductions. payroll department deductions, commonly called withholdings, are amounts withheld from an employees gross pay, either take or voluntary. infallible deductions result from laws and complicate income taxes and well-disposed auspices taxes. voluntary deductions, at an employees option, overwhe lm pension and wellness contributions, union dues, and likable giving. WithholdingsRECORDING EMPLOYEE payroll department DEDUCTIONSThe penetration to come in payroll expenses and deductions for an employee talent look like this. $4,000 ? 6. 20% = $248 $4,000 ? 1. 45% = $58EMPLOYER PAYROLL TAXESEmployers pay amounts stir to that withheld from the employees gross pay.RECORDING EMPLOYER PAYROLL TAXESThe entry to magnetic disk the employer payroll taxes for January mogul look like this