Posts in the Financial Accounting category:

Financial Accounting

Partner Leaves Partnership Cash Greater then Capital Acco

Written by Bob Steele CPA - Accounting Instruction, Help & How To on . Leave a comment

The journal entry for a partner leaving a partnership. When a partner leaves the partnership we will need to take the partnership capital account down to zero with an adjusting journal entry. The partners leaving the partnership will generally is paid in some format, topically with cash. It would be easiest of the partner gets paid an amount equal to the partnership capital account resulting in a credit to cash and a debit to the capital account. It is often the case, however, that the partners is paid more or less then the amount of their capital account. The difference will be allocated to the remaining partners either increasing or decreasing their capital accounts. For more accounting information see website. http://accountinginstruction.info/cou…

 

Financial Accounting

Federal Income Tax FIT – Percent Method – How to calculate FIT using percent method

Written by Bob Steele CPA - Accounting Instruction, Help & How To on . Leave a comment

Calculating federal income tax FIT can be confusing because it is not a flat tax but a progressive tax. There is software to help and the IRS provides table to help with the process. To use the table s we nee marital status, allowances, and pay periods. If the income it over a certain dollar amount we may not be able to use the tables but must use the percentage method. It is useful to calculate the federal income tax withholding FIT withholdings using the percentage method because it gives us a better idea of how the progressive tax system works, how different layers of wages are taxed at different rates. For more accounting Information see website http://accountinginstruction.info/cou…

 

Financial Accounting

Partnership Closing Process – Journal Entries for The Closing Process of Partnership Entity

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The closing process for a partnership entity is much the same as any other entity except for the final step, the closing of net income to the capital account. It is important to go through the entire closing process, however, so that know all the steps. Many partnership example problems well ask us to close out net income or may ask us to close out the income summary account to the capital accounts. We need to remember that closing out net income or closing out the income summary account is part of the closing process. The for steps of the closing process are to close out revenue to the income summary account, close out expenses to the income summary account, close out the income summary account to the partner capital accounts, and close out draws to the partner capital accounts. We will use an even income allocation to close out the income summary account to the capital accounts. Form more accounting information see website. http://accountinginstruction.info/cou…

 

Financial Accounting

Overtime Calculation – Financial Accounting

Written by Bob Steele CPA - Accounting Instruction, Help & How To on . Leave a comment

Overtime calculation in a few different formats. Overtime is generally thought of as time and a half. In other words overtime rates are time and a half of the original rate. Although we often use the term time and a half many don’t understand what it means fully. Overtime is usually calculated similar to a 50% raise. We can calculate the overtime rate as the original rate times 50% plus the regular rate. We can also calculate overtime as the origianl rate times 1.5 or 150%, the 1 representing the original time and the .5 representing the added 50% increase. Fore more accounting information see website: http://accountinginstruction.info/cou…

 

Financial Accounting

Payroll Periods and Time Frames

Written by Bob Steele CPA - Accounting Instruction, Help & How To on . Leave a comment

We will discuss payroll pay periods that companies could use to process payroll. Companies could process payroll monthly, weekly, biweekly, and semimonthly. It is useful to know the number of pay period in a year so we can calculate payroll and make comparisons between hourly wages and salary wages.
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Financial Accounting

FUTA, SUTA Workers Compensation – Financial Accounting

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We will discuss Fedural Unemployment Tax Act FUTA and State Unemployment Tax Act SUTA. We discuss these two payroll accounting acts together because they are closely related. Although the states have their own write to create taxes for their state the federal FUTA law uses state SUTA as part of the federal calculation. For more accounting information see website: http://accountinginstruction.info/cou…

 

Financial Accounting

Change In Estimates – Financial Accounting

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We will discus the accounting for a change in a financial accounting estimate related to depreciation. The calculation of depreciation is an estimate of the cost allocated to the useful life. There are a few components of the calculation that are estimates that can change as we get better information over time. One component of the depreciation calculation that is an estimate is the useful life, how long the depreciable asset will be used in operations. Another estimate in the depreciation calculation is the salvage value. When these estimates change over time it is often best to account for the change at the point it is found and going forward rather then going back and recalculating depreciation for prior years. For more accounting information see website. http://accountinginstruction.info/cou…

 

Financial Accounting

Allowance Method % Accounts Receivable vs % Sales Method u

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We will compare the percentage of accounts receivable to the sales method for calculating the allowance for doubtful accounts and bad debt expense. Under the allowance method we need to calculate the the estimated accounts receivable to be uncollectible and the bad debt expense for a period. We can use either a balance sheet approach or an incomes statement approach. We can focus on valuing the accounts receivable account or on how much of the current period sales are not collectible. The percentage of accounts receivable method focuses on the balance sheet account of accounts receivable and the percentage of sales method focuses on the income statement.
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Financial Accounting

Allowance Method VS Direct Write Off Method – Financial Accounting

Written by Bob Steele CPA - Accounting Instruction, Help & How To on . Leave a comment

We will compare and contrast the allowance method and the direct write off method for dealing with accounts receivable. Accounts receivable is an asset but it is possible for it to be overstated by the amount of receivable not collectible. We could weight until we determine these receivables to be collectible to writhe them off, the direct write off method, or we can make an estimate of the uncollectable amount, the allowance method. The direct write off method is easier to use, takes less steps and requires less estimates, but it does not comply with the matching principle as well. The allowance method requires and estimate but does a better job of matching the bad debt expense with the same time period revenue is earned. The allowance method is the preferred method under Generally Accepted Accounting Principles GAAP For more accounting information see website: http://accountinginstruction.info/cou…