Current Liabilities (Notes, Sales Tax, & Payroll Taxes)
This problem-based learning activity helps students practice analyzing economic events associated with the following current liabilities: short-term borrowing (notes payable), sales tax liabilities, and payroll. The note payable problem has students accrue interest expense at year end and repay the note early during the subsequent year. Sometimes companies include the sales tax in the selling price of merchandise instead of ringing it up separately. The sales tax problem illustrates this scenario. The payroll problem illustrates how a company accounts for employees' gross wages, withholdings from employee's paychecks, net pay (the resulting cash employees receive), as well as the employer's payroll tax liabilities.