17E - Horngren'S Financial And Managerial Accounting

Question

Erin O’Neil Associates reported short-term notes payable and salaries payable as follows:

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

 

During 2018, O’Neil 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’Neil during 2018. Assume no interest on short-term notes payable of $16,000.

Step-by-Step Solution

Answer

The short-term note payable is $16,900

Step 1: 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.

Step 2: 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