Week Two Summary
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Acct. 291
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Week Two Summary
As a class we reviewed several issues in week two of Accounting. One issue that we discussed was the three taxes that are taken out each time we receive a paycheck. These taxes are FICA, Federal and State unemployment tax. We also learned about sales tax / tax payable. That these are a percentage of the sale price and can either be rang up separately or be included in total receipts, and factored out later. These taxes are collected by the retailer from the customers and then remits the taxes collected to their respective state’s department of revenue. We also learned how companies log these taxes in their journals and ledgers Week two also learned about bonds. There are secured and unsecured bonds, term and serial bonds, registered and bearer bonds, and convertible and callable bonds. In determining the market value of a bond. There are three important factors regarding bonds one must consider, they are the dollar amount received, the length of time until the amounts are received, and the market rate of interest. If the market rate is below the contractual rate then the bonds are sold at a premium rate. If the market value is higher than the contractual rate then bonds are sold at a discount rate. We also talked about the amortization of bond premiums and discounts that can be associated with the issuance of bonds. Knowing this makes us educated on the type of bond we should buy on an individual and business level.
In week two, our discussion covered short and long term liabilities and how to prepare entries in the books of accounts. Liabilities, as we understand from our text is; “anything the company owes to others,” and are classified as current or short term. This indicates that they are to be paid in a short period of time, normally within one year, or