17E Erin O鈥橬eil Associates reporte... [FREE SOLUTION]

Chapter 11: 17E (page 607)

Erin O鈥橬eil Associates reported short-term notes payable and salaries payable as follows:
2018
2017
Current Liabilities鈥攑artial:
Short-term Notes Payable
$16,900
$ 16,000
Salaries Payable
3,400
4,000
During 2018, O鈥橬eil paid off both current liabilities that were left over from 2017, borrowed cash on short-term notes payable, and accrued salaries expense. Journalize all four of these transactions for O鈥橬eil during 2018. Assume no interest on short-term notes payable of $16,000.

Short Answer

Expert verified

The short-term note payable is $16,900

Step by step solution

Meaning of Current Liabilities

Current liabilities are monetary commitments owed by an association due within one year or an entire operational cycle. The operational period, moreover known as the money conversion cycle, is the time it takes for an organization to procure stock and change it from deals to liquid cash.

Preparing journal entry

Date	Particulars	Debit ($)	Credit ($)
	Short-term notes payable	16,000
	Salaries payable	4,000
	Cash		20,000

	Cash	16,900
	Short-term notes payable		16,900

	Salaries expense	3,400
	Salaries payable		3,400

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Earnings			Withholdings
Beginning Cumulative Earnings	Current Period Earnings	Ending Cumulative Earnings	OASDI	Medicare	Income tax	Health Insurance	United way	Total Withholding	Net pay	Check No.	Salaries and Wages Expense
\( 77,000	\) 4,500				\( 900	\) 90	\(15			801
112,000	7,200				1,200	144	35			802
48,000	3,300				600	66	0			803
61,000	3,300				850	66	20			804
0	4,500				1,100	90	0			805
\)298,000	\(22,800				\)4,650	\(456	\)70

Nov.21	Made sales of \(52,000. McNight estimates that warranty expense is 6% of sales.(Record only the warranty expense.)
30	Paid \)1,600 to satisfy warranty claims.
Dec.31	Estimated vacation benefits expense to be \(6,000
31	McNight expected to pay its employees a 3% bonus on net income after deducting the bonus. Net income for the year is \)52,000

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Short Answer

Step by step solution

Meaning of Current Liabilities

Preparing journal entry

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	2018	2017
Current Liabilities鈥攑artial:
Short-term Notes Payable	\(16,900	\) 16,000
Salaries Payable	3,400	4,000