My text book is Hospitality Industry Financial Accounting (4th edition). I am in chapter 12 -- CURRENT LIABILITIES AND PAYROLL now. There is a question asks me to do two tasks. 1. Prepare the necessary journal entry to record the payroll of Hotel Properties, Inc., on February 15, 20x1. 2. Prepare the journal entry that would be made on the date the payroll was actually paid. The scenario is the following: You have been asked to prepare the entry to record the payroll on February 15, 20x1, for Hotel Properties, Inc. The gross wages are $8,000 for administrative salaries and $6,000 for sales salaries. The federal income tax rate is 28 percent, the state income tax rate is 4.6 percent, and the FICA rate is 7.65 percent for all employee. All wages are subject to these taxes. In addition to taxes withheld, the employer has withheld $128 for the employees' contribution to a health insutance plan.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
My text book is Hospitality Industry Financial Accounting (4th edition). I am in chapter 12 -- CURRENT LIABILITIES AND PAYROLL now.
There is a question asks me to do two tasks.
1. Prepare the necessary
2. Prepare the journal entry that would be made on the date the payroll was actually paid.
The scenario is the following:
You have been asked to prepare the entry to record the payroll on February 15, 20x1, for Hotel Properties, Inc. The gross wages are $8,000 for administrative salaries and $6,000 for sales salaries. The federal income tax rate is 28 percent, the state income tax rate is 4.6 percent, and the FICA rate is 7.65 percent for all employee. All wages are subject to these taxes. In addition to taxes withheld, the employer has withheld $128 for the employees' contribution to a health insutance plan.
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