CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 9-3LESSON 9-3

Accrued Expenses

Accrued interest expense.Recording payment of note at maturityAccrued salary expense.Accrued employer payroll taxes expense.Accrued federal income tax expense.Adjusting, closing, and reversing entries to accrued expenses

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Competency: Accounting Adjustments and Competency: Accounting Adjustments and Valuation/Accrued Accounting for Notes Valuation/Accrued Accounting for Notes Payable, Prepaid Expenses, ExpensesPayable, Prepaid Expenses, Expenses

Objectives

49. Perform all notes payable and notes receivable activities.

50. Analyze all accounts payable and accounts receivable activities.

52. Record accrued expenses.

2

LESSON 9-3

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

3

LESSON 9-3

PrincipalInterest Rate

Time as Fraction of Year

Interest for 15 Days

=

1. Determine the amount of accrued interest.

2. Debit the expense account.

3. Credit the liability account.

JOURNALIZING ACCRUED JOURNALIZING ACCRUED INTEREST EXPENSEINTEREST EXPENSE page 272

11

22

33

$7,500.00 10% = $31.2515

360

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

4

LESSON 9-3

1. Debit the liability account.

2. Credit the expense account.

REVERSING ENTRY FOR REVERSING ENTRY FOR ACCRUED INTERESTACCRUED INTEREST page 273

11

22

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

5

LESSON 9-3

Notes Payable

2/13 7,500.00 1/1 Bal. 7,500.00

Interest Expense

2/13 125.00 1/1 Bal. 31.25

PrincipalInterest Rate

Time as Fraction of Year

Total Interest Due

=

1. Calculate total interest due at maturity.

2. Debit Notes Payable, $7,500.00.

3. Debit Interest Expense, $125.00. (Credit Cash, $7,625.00.)

4. Determine the interest expense for the current period.

PAYMENT OF NOTE AT MATURITYPAYMENT OF NOTE AT MATURITY page 273

11

22

33

$7,500.00 10% = $125.0060360

Interest Expense Recorded in

Previous Period

Total Interest Expense for the

Note

Interest Expense Recorded in

Current Period– =

$125.00 – = $93.75$31.25 44

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

6

LESSON 9-3

1. Debit the expense accounts.

2. Credit the liability accounts.

JOURNALIZING ACCRUED JOURNALIZING ACCRUED SALARY EXPENSESALARY EXPENSE page 274

11

22

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

7

LESSON 9-3

1. Debit the liability accounts.

2. Credit the expense accounts.

REVERSING ENTRY FOR REVERSING ENTRY FOR ACCRUED SALARYACCRUED SALARY page 275

11

22

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

8

LESSON 9-3

1. Debit the expense account.

2. Credit the liability accounts.

JOURNALIZING ACCRUED EMPLOYER JOURNALIZING ACCRUED EMPLOYER PAYROLL TAXES EXPENSEPAYROLL TAXES EXPENSE page 276

11

22

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

9

LESSON 9-3

1. Debit the liability accounts.

2. Credit the expense account.

REVERSING ENTRY FOR ACCRUED REVERSING ENTRY FOR ACCRUED EMPLOYER PAYROLL TAXESEMPLOYER PAYROLL TAXES page 276

11

22

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

10

LESSON 9-3

1. Debit the expense account.

2. Credit the liability account.

JOURNALIZING ACCRUED FEDERAL JOURNALIZING ACCRUED FEDERAL INCOME TAX EXPENSEINCOME TAX EXPENSE page 277

11

22

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

11

LESSON 9-3

TERM REVIEWTERM REVIEW

accrued expenses

page 279