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Adeng Pustikaningsih, M.Si.
Dosen Jurusan Pendidikan Akuntansi Fakultas Ekonomi
Universitas Negeri Yogyakarta
CP: 08 222 180 1695
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1.
Describe and illustrate current
liabilities related to accounts payable,
current portion of long-term debt, and
notes payable.
2.
Determine employer liabilities for
payroll, including liabilities arising
from employee earnings and
deductions from earnings.
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3.
Describe the payroll accounting
systems that use a payroll register,
employee earnings records, and a
general journal.
4.
Journalize entries for employee
fringe benefits, including vacation
pay and pensions.
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5.
Describe the accounting treatment for
contingent liabilities and journalize
entries for product warranties.
6
Describe and illustrate
current liabilities related to
accounts payable, current
portion of long-term debt,
and notes payable.
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Liabilities that are to be paid out of
current assets and are due within a
short time, usually within one year,
are called
current liabilities
.
Accounts payable
Current portion of long-term debt
Notes payable
8
Accounts payable
arise from
purchasing goods or services for use
in a company’s operations or for
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11-1
Current Portion of Long-Term Debt
Long-term liabilities are often paid
back in periodic payments, called
installments
. Installments
that are
due within the coming year must be
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The total amount of the
installments due after the
coming year is classified as a
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11 10 Aug. 1 Accounts Payable—PT Murni Hati. 1 000 000
Issued a 90-day, 12% note on account.
Notes Payable 1 000 000
A firm issues a 90-day, 12% note for
Rp1,000,000 dated August 1, 2008 to PT
Murni Hati. for a Rp1,000,000 overdue
account.
12 11
firm pays the Rp1,000,000 principal plus
Rp30,000 interest (Rp1,000,000 x 12% x
90/360).
Oct. 30 Notes Payable 1 000 000
Interest Expense 30 000
Paid principal and
interest on note.
Cash 1 030 000
Appears on the income statement as
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On May 1, PT Budi Jaya.
(borrower) purchased
merchandise on account from PT
Citra Permai. (creditor),
Rp10,000,000, 2/10, n/30. The
merchandise cost PT Citra
Permai. Rp7,500,000.
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Mdse. Inventory 10,000,000
Accounts Payable 10,000,000
PT Citra Permai. (Creditor)
Description Debit Credit
Accounts Receivable 10,000,000
Sales 10,000,000
Cost of Mdse. Sold 7,500,000
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On May 3, PT Budi Jaya issued a 60-day, 12% note for Rp10,000,000 to
PT Citra Permai. on account.
Accounts Payable 10,000,000
Notes Payable 10,000,000 Description Debit Credit
PT Budi Jaya (Borrower)
Notes Receivable 10,000,000
Accounts Receivable 10,000,000
PT Citra Permai (Creditor)
Description Debit Credit
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On July 30, PT Budi Jaya. paid PT Citra Permai. the amount due
on the note of May 31. Interest: Rp10,000,000
x 12% x 60/360.
Notes Payable 10,000,000 Interest Expense 200,000
Cash 10,200,000
Description Debit Credit
Cash 10,200,000
Interest Revenue 200,000 Notes Receivable 10,000,000
PT Citra Permai (Creditor)
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On September 19, a firm borrows
Rp4,000,000 from Mandiri Bank by giving the bank a 90-day, 15% note.
Sept. 19 Cash 4 000 000
Notes Payable 4 000 000 Issued a 90-day, 15% note
to the bank.
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On the due date of the note (December 18), the borrower owes RP4,000,000 plus interest of
Rp150,000 (Rp4,000,000 x 15% x 90/360).
Dec. 18 Notes Payable 4 000 000
Cash 4 150 000
Paid principal and interest due on note.
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The interest set by the creditor when a note does not specify the rate is called the discount. The rate used in
computing the discount is called the
discount rate. The borrower is given the remainder (face – discount),
called the proceeds.
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On August 10, PT Cika issues a Rp20,000,000, 90-day note to PT Koko in exchange for
inventory. Rock discounts the note at 15%.
Aug. 10 Merchandise Inventory 19 250 000
Notes Payable 20 000 000 Issued a 90-day note to Rock
Co., discounted at 15%.
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On August 10, PT Cika issues a Rp20,000,000, 90-day note to PT Koko in exchange for inventory. PT
Koko discounts the note at 15%.
11-1
Aug. 10 Merchandise Inventory 19 250 000
Notes Payable 20 000 000 Issued a 90-day note to PT
Koko, discounted at 15%.
Interest Expense 750 000
Discount:
Rp20,000,000 x .15 x 90/360
Discount rate
Proceeds
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On November 8 the note is paid in full.
Nov. 8 Notes Payable 20 000 000
Cash 20 000 000
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Example Exercise 11-1
On July 1, Bella Salon Company issued a 60-day note with a face amount of $60,000 to Jamilah Hair Products Company. for merchandise inventory.
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a. Determine the proceeds of the note assuming the note carries an interest rate of 6%.
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For Practice: PE 11-1A, PE 11-1B 23
Follow My Example 11-1
a. Rp60,000,000
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Determine employer
liabilities for payroll,
including liabilities arising
from employee earnings and
deductions from earnings.
Objective 2
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for the services they provide during a period. It is usually significant for several reasons.
1) Employees are sensitive to payroll errors and irregularities.
2) The payroll is subject to various federal and state regulations.
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11-2
Wages
usually refers to
payment for manual labor, both
skilled and unskilled. The rate
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11-2
The total earnings of an employee
for a payroll period are called
gross
pay
. From this is subtracted one or
more
deductions
to arrive at the
net
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Akhmad Faisal is employed by PT Swabahagia at the rate of Rp30,000 per hour, plus 2 time the normal hourly rate for the first hour overtime and 1.5 time the
normal hourly rate for the next hours. For the week ended December 27, Faisal worked 42 hours.
Earnings at base rate (40 x Rp30,000) Rp1,200,000 Earnings at OT rate-first hour (1.5 x Rp30,000) Rp45,000 Earnings at OT rate-next hours (2xRp30,000) Rp60,000
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Deduction from Employee Earnings
•
Old Age Security (
Jaminan Hari Tua/JHT)
– A series of periodic money payment as
anticipation to an employee who retires from employment because of age, disability of the completion of an agreed span of service.
•
Health Maintenance Security
(Jaminan
Kesehatan)
– It is optional under Jamsostek program
32
Source: Income Tax Law No. 17/2000
McGrath wage
bracket
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New Wage Tax Bracket
People earning:
•
Up to Rp50 million: 5%
•
Between Rp50 million and Rp250 million: 15%
•
Between Rp250 million and Rp500 million: 25%
•
More than Rp500 million: 30%
With PTKP: Rp15.86 million and the treshold for
married tax payers: Rp1.32 million
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Tomy Gunawan (married with 3 dependents known as m/3) working for PT Banyugeni earns monthly salary with the amount of Rp2,000,000. PT Banyugeni
participates on the Jamsostek and pays the monthly insurance premium of occupational accident security and death benefit security with the amount of Rp4,800 (0.24% of monthly salary) and 6,000 (0.3% of monthly salary).
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The monthly contributions for JHT is borne by PT Banyugeni with the amount of Rp74,000 (3.7% from monthly salary) and Tomy himself pays for the JHT with the amount of Rp40,000 (2% from monthly
salary).
Furthermore, the company participates on the pension program for its employees. The company pays the
monthly contributions for pension to the approved
pension funds with the amount of Rp60,000 and Tomy himself pays the contributions with the amount of
Rp25,000.
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Computing Tommy’s Net Pay 11-2 11-2
Tommy’s net pay:
Gross earnings for the month Rp2,000,000 Deductions:
Contribution for old age security (Slide 35) Rp 40,000 Contribution for pension (Slide 35) Rp 25,000 Income tax (Slide 35) Rp20,550 Cooperative Fund Rp25,000
Total deductions Rp110,550
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Under Jamsostek Program Employers are
required to contribute to the old age
security/JHT, Occupational Accident Security
and Death Benefit Security for each
employee. The employer must contribute
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11-2 11-2
Occupational accidents that injure employees are the responsibility of the employer and are covered
by occupational accident security. Such benefit provides payments for work-related accident. There are five classifications by industry with contributions for accident security ranging from
0.24% to 1.74% of wage depending on the
classification of the employer’s type of business.
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Death benefit is a payment that may be made in a variety of circumstances
because of the death of the employees. The employers are required to contribute 0.3%
from employees’ income for this benefit
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42
Describe payroll accounting
systems that use a payroll
register, employee earnings
records, and a general journal.
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Payroll Register 11-3
The payroll register is a multicolumn report used for summarizing the data for
each payroll period. The last two
columns of the payroll register are used to accumulate the total wages or salaries
to be debited to various expense
accounts. The process is usually called
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11-3
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46 48 Office Salaries Expense 6,650,000
Payroll for week ended December 27.
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Example Exercise 11-4
The payroll register of Nikko Engineering Services indicates Rp900,000 of old age
security withheld and Rp225,000 of Medical maintenance security contribution withheld on total salaries of Rp15,000,000 for the period. Income tax article 21 for the period totaled Rp2,925,000.
Provide the journal entry for the period’s
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For Practice: PE 11-4A, PE 11-4B 50
Salaries Expense 15,000,000
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11-3
Recording and Paying Payroll Taxes
To illustrate, assume that PT Eliyana owes its
employees Rp260,000,000 of wages on December 31. Also, assume that PT Eliyana participates in Jamsostek program. The following portions of the
Rp260,000,000 of wages are subject to employee’s
payroll liabilities on December 31:
Old Age Security Cont (3.7%) Rp11,024,000 Occupational acc. Security cont (0.24%) Rp624,000 Death Benefit Security contribution (0.3%) Rp780,000
Earnings Subject to Payroll Taxes
50 53 Dec. 31 Payroll Tax Expense 11 024 000
Payroll taxes for week ended December 27.
Old Age Security Contribution Payable 9 620 000 Occupational accident security Payable 624 000 Death Benefit Security Payable 780 000
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11-3
A detailed payroll record is maintained for each employee. This record is called an
employee’s earnings record.
At the end of each pay period, payroll checks are prepared. Each check includes a detachable statement showing the details
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11-3
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Journalize entries for
employee fringe benefits,
including vacation pay
and pensions.
Objective 4
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Many companies provide their employees a variety of benefits in
addition to salary and wages earned. Such fringe benefits may
take many forms, including vacations, medical, and
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11-4
Most employers grant vacation rights, sometimes called compensated absences, to their
employees. The estimated vacation pay for the payroll period ending May 5 is Rp2,000,000.
Vacation Pay
May 5 Vacation Pay Expense 2 000 000
Vacation Pay Payable 2 000 000 Vacation pay for week
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A
pension
represents a cash payment
to retired employees. Rights to
pension payments are earned by
employees during their working
years, based on the pension plan
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11-4
In a
defined contribution
plan
, a fixed amount of
money is invested on the
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The pension plan of Aroma Perfumes Company requires an employer contribution of 10% of
employee monthly salaries. December salaries totaled
Rp500,000,000, so Rp50,000,000
was sent to the employees’ plan
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11-4
Defined Contribution Plan
Dec. 31 Pension Expense 50 000 000
Cash 50 000 000 Contributed 10% of
monthly salaries to pension plan.
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In a
defined benefit plan
,
employers promise employees a
fixed annual pension benefit at
retirement, based on years of
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Defined Benefit Plan 11-4
Assume that PT Hasil Jaya requires an annual pension cost of Rp80,000,000 based on an estimate of the future benefit obligation. PT Hasil Jaya pays
Rp60,000,000 into the pension fund.
Dec. 31 Pension Expense 80 000 000
Cash 60 000 000 Unfunded Pension Liability 20 000 000
To record annual pension cost and
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Employees may earns rights to
other postretirement benefits
,
such as dental care, eye care,
medical care, life insurance,
tuition assistance, tax services,
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Example Exercise 11-6
Manunggal Service provides their employees vacation benefits and a defined contribution
pension plan. Employees earned vacation pay of Rp44,000,000 for the period. The pension plan requires a contribution to the plan administrator equal to 8% of employee salaries. Salaries were Rp450,000,000 during the period.
Provide the journal entry for (a) the vacation pay and (b) pension benefit.
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For Practice: PE 11-6A, PE 11-6B 73
a. Vacation Pay Expense 44,000,000
Vacation Pay Payable 44,000,000 Vacation pay accrued for
the period.
b. Pension Expense 36,000,000
Cash 36,000,000
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Describe the accounting
treatment for contingent
liabilities and journalize
entries for product
warranties.
Objective 5
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Some past transactions will result
in liabilities if certain events
occur in the future. These
potential obligations are called
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During June, a company sells a product for
Rp60,000,000 on which there is a 36-month warranty. Past experience indicates that the average cost to repair defects is 5% of the sales price over the warranty price.
June 30 Product Warranty Expense 3 000 000
Warranty expenses projected for June, 5% of Rp60,000,000.
Product Warranty Payable 3 000 000
11-5
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If a customer required a Rp200,000 part
replacement on August 16, the entry would be:
Aug. 16 Product Warranty Payable 200 000
Replaced defective part under warranty.
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71 Likelihood of Occurring Measurement Accounting TreatmentProbable Estimable
Record and Disclose Liability Not Estimable Disclose Liability Disclose Liability Contingency Possible 11-5
Accounting Treatment of Contingent Liabilities
10
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PT Ratu Mas sold Rp140,000,000 of kitchen appliances during August under a 6 month
warranty. The cost to repair defects under the
warranty is estimated at 6% of the sales price. On September 11, a customer required a Rp200,000 part replacement, plus Rp90,000 labor under the warranty.
Provide the journal entries for (a) the estimated warranty expense on August 31 and (b) the
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For Practice: PE 11-7A, PE 11-7B 80
Follow My Example 11-7
a. Product Warranty Expense 8,400,000
Product Warranty Payable 8,400,000 To record warranty expense
for August, 6% x Rp140,000,000.
b. Product Warranty Payable 290,000
Supplies 200,000
Wages Payable 90,000
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Quick assets:
Cash Rp147,000 Rp120,000
Accounts receivable (net) 84,000 472,000 Total Rp231,000 Rp592,000
Current liabilities Rp220,000 Rp740,000
Quick assets Current liabilities Quick Ratio =
The quick ratio or acid-test ratio can be used
to evaluate a firm’s ability to pay its current
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11-5
Quick Ratio
Quick assets Current liabilities Quick Ratio =
Quick assets:
Cash Rp147,000 Rp120,000
Accounts receivable (net) 84,000 472,000 Total Rp231,000 Rp592,000
Current liabilities Rp220,000 Rp740,000
PT Nirina PT Haryadi
PT Nirina = Rp231,000
Rp220,000 = 1.05
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Quick assets Current liabilities Quick Ratio =
Quick assets:
Cash Rp147,000 Rp120,000
Accounts receivable (net) 84,000 472,000 Total Rp231,000 Rp592,000
Current liabilities Rp220,000 Rp740,000
PT Haryadi = Rp592,000
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11-5
Interpretation
PT Nirina is in a better quick ratio
position than PT Haryadi. By
having a quick ratio in excess of 1,
PT Nirina has quick assets sufficient
to cover the company’s current
