Lesson Plan 3.1 – Accounting for Current Liabilities
Course Title: Accounting II
Lesson Title: Accounting for Current Liabilities
Specific Objective:
Understand the proper accounting procedures for handling notes payable,
accounts payable and other current liabilities.
TEKS: 130.167.c:
4.C – determine business liquidity;
8.B – create a clear and coherent oral and written presentation that includes the
use of correct grammar, spelling, punctuation, and citation of resource materials
TAKS: R1, M1, M10
Performance Objectives:
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Distinguish between current and long-term liabilities
Explain the difference between interest-bearing and non-interest-bearing
notes;
Record transactions for interest-bearing and noninterest-bearing notes
payable;
Record net invoices and other current liabilities;
Identify accounting concepts and practices related to prepaid expenses and
accrued expenses;
Journalize adjusting and reversing entries for prepaid expenses initially
recorded as expenses;
Journalize adjusting and reversing entries for accrued expenses;
Define accounting terms related to the lesson.
Preparation
Materials and Equipment Checklist:
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Overhead projector
Glencoe’s Textbook, Chapter 7, (pp. 200-227), and Demonstration Problems
Century 21’s Textbook, Chapter 9, (pp. 250-269)
Accounting Software and spreadsheet software.
Teaching Strategies:
Glencoe’s Textbook provides helpful Demonstration Problems.
Sponge/Focus Activity:
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Discuss the reasons a growing businesses might need to borrow money for
short time periods.
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Exploring the Real World of Business, (p. 200) in Glencoe’s Textbook
Lesson Content:
Lesson Plan 3.1 – Accounting for Current Liabilities-
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
o Glencoe’s Textbook, Chapter 7, (pp. 200-227), or Century 21’s
Textbook, Chapter 9, (pp. 250-269). Here is an outline:
I.
II.
III.
Interest-bearing notes payable
A. Recording notes payable transactions
1. Issuing an interest-bearing note payable
2. Paying an interest-bearing note payable
3. Renewing an interest-bearing note payable at maturity
4. Adjusting for accrued interest expense
Noninterest-bearing notes payable
A. Recording the issuance of a noninterest-bearing note payable
B. Recording the payment of a noninterest-bearing note payable
C. Adjusting for prepaid interest expense
Accounts payable and other current liabilities
A. Accounts payable
B. Dividends payable
C. Federal corporate income tax payable
D. Payroll liabilities
E. Salaries payable
F. Sales tax payable
G. Unearned revenue
Assessment:
o For problems you can use Peachtree Accounting from Glencoe, Glencoe
Accounting Software, Century 21 Accounting Software, or a spreadsheet.
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From Glencoe’s Textbook Problems
o Guided Practice
 7-1 Recording Notes Payable, p 209
 7-2 Recording Noninterest-Bearing Note Payable
Transactions, p. 216
 7-3 Analyzing a Source Document, p. 226
o Independent Practice
 7-4 Issuing and Paying Interest-Bearing Notes Payable,
p. 231
 7-5 Issuing and Paying Noninterest-Bearing Notes Payable,
p. 231
 7-6 Renewing Interest Bearing Notes Payable at Maturity,
p. 232
 7-7 Recording Accrued and Prepaid Interest on Notes,
p. 232
 7-8 Recording Invoices at Net Amount, p. 233
 7-9 Recording Accrued Expenses and Unearned Revenue,
p. 233
o Additional Activities: Using Key Terms, Understanding Accounting
Concepts and Procedures, Case Study, Conducting an Audit with
Alex, Internet Connection, and Workplace Skills, pp. 228-229
o Open book Quiz: Study Guide for Chapter
From Century 21’s Textbook
Lesson Plan 3.1 – Accounting for Current Liabilities-
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
o Guided Practice
 Work Together: Journalizing notes payable transactions,
p. 255
 On Your Own: Journalizing notes payable transactions,
p. 255
 Work Together: Journalizing adjusting and reversing entries
for prepaid expenses initially recorded as expenses, p. 261
 On Your Own: Journalizing adjusting and reversing entries
for prepaid expenses initially recorded as expenses, p. 261
 Work Together: Journalizing adjusting and reversing entries
for accrued expenses, p. 268
 On Your Own: Journalizing adjusting and reversing entries
for accrued expenses, p. 268
o Independent Practice
 9-1 Journalizing notes payable transactions, p. 270
 9-2 Journalizing adjusting and reversing entries for prepaid
expenses initially recorded as expenses, p. 270
 9-3 Journalizing adjusting and reversing entries for accrued
expenses, p. 271
 9-4 Journalizing adjusting and reversing entries for prepaid
expenses initially recorded as expenses and for accrued
expenses, p. 271-272
 9-5 Journalizing entries for notes payable and prepaid
insurance when no reversing entries are recorded, p. 272
o Additional Activities: Applied Communication and Cases for Critical
Thinking, p. 273
o Open Notebook Quiz: Study Guide for Chapter 9
o This lesson is also assessed through the Unit Test at the end of the Unit.
Additional Resources:
Textbooks:
Guerrieri, Donald J., F. Barry Haber, William B. Hoyt, and Robert E. Turner,
Glencoe Accounting Real-World Applications & Connections, Advanced
Course, Fourth Edition, Glencoe McGraw-Hill: New York, New York.
Ross, Kenton E., CPA, Mark W. Lehman, CPA, Claudia Bienias Gilbertson, CPA,
Robert D. Hanson, Century 21 Accounting Advanced, Anniversary Edition,
Thomson South-Western: Mason, OH, 2003.
Multi-Media:
Century 21’s Teacher Resource CD
Websites:
http://accounting.swpco.com
Lesson Plan 3.1 – Accounting for Current Liabilities-
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II