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Payroll Accounting
INDEX
01
Current Liabilities
02
Contingent Liabilities
03
Payroll Accounting
01
Current Liabilities
Current Liabilities is a debt that a company expects to pay within one year or the operating cycle, whichever is longer.
(Debts that do not meet this criterion are classified as long-term liabilities)
Current Liabilities
Notes payable
Accounts payable
Unearned revenues
Accrued liabilities
Taxes
Salaries and
Wages
Unearned
revenues
Current Liabilities
A note payable is a liability in writing that promises to pay a specific amount of money at future date or on demand.
Notes are issued for varying periods of time.
Those due for payment within one year of the balance sheet date are usually classified as current liabilities.
Note Payable
* Illustration
First National Bank agrees to lend $100,000 on September 1, 2014, if Cole Williams Co. signs a $100,000, 12%, 4-month note maturing on January 1.
Note Payable
When a company issues an interest-bearing note, the amount of assets it receives upon issuance of the note generally equals the note’s face value.
Cole Williams Co. therefore will receive $100,000 cash and will make the following journal entry.
Note Payable
Sept.1
Cash
Notes Payable
(To record issuance
of 12%, 4-month
note to First
National Bank)
100,000
100,000
Note Payable
