Lesson Plan 3.2 – Accounting for Long-Term Liabilities
Course Title: Accounting II
Lesson Title: Accounting for Long-Term Liabilities
Specific Objective:
Understand proper accounting procedures for long-term 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:







Distinguish between mortgage notes payable and bonds payable;
Record transactions involving mortgage notes;
Identify various types of bonds;
Record transactions for bond issues;
Explain the purpose of a bond sinking fund;
Record transactions involving a bond sinking fund;
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:

Ask students to check the financial pages or the finance section of Yahoo and
determine the kind of bond information available.

Exploring the Real World of Business, p. 234 in Glencoe’s Textbook
Lesson Content:
Glencoe’s Textbook, Chapter 7, (pp. 200-227), or Century 21’s Textbook,
Chapter 9, (pp. 250-269). Here is an outline:
I.
Acquiring funds
A. Borrowing money by issuing mortgage notes
1.
Issuing a mortgage note
2.
Recording a mortgage note
Lesson Plan 3.2 – Accounting for Long-Term Liabilities
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
II.
III.
B. Borrowing money by issuing bonds
1.
Advantages of Issuing Bonds
2.
Disadvantages of issuing bonds
3.
Term and serial bonds
4.
Registered and coupon bonds
5.
Secured and unsecured bonds
Bond payable transactions
A. Bond interest rates
1.
Issuing bonds at face value
2.
Recording the interest on bonds payable
3.
Issuing bonds at a premium
4.
Issuing bonds at a discount
5.
Accrued bonds interest
Redemption of bonds and the bond sinking fund
A. Redemption of bonds
1.
Redeeming bonds at a loss
2.
Redeeming bonds at a gain
B. Bonds sinking fund
Assessment:

For problems you can use Peachtree Accounting from Glencoe, Glencoe
Accounting Software, Century 21 Accounting Software, or a spreadsheet.

From Glencoe’s Textbook Problems
o Guided Practice
 8-1 Recording Mortgage Note Transactions, p. 241
 8-2 Recording Bond Transactions, p. 253
 8-3 Analyzing a Source Documents, p. 253
 8-4 Computing Losses and Gains on Redemption of Bonds,
p. 260
o Independent Practice
 8-5 Recording Mortgage Notes, p. 265
 8-6 Issuing Bonds at a Premium, p. 265
 8-7 Issuing Bonds at a Discount, p. 265-266
 8-8 Accounting for Bond Interest, p. 266
 8-9 Redeeming a Bond Issue, p. 266-267
 8-10 Recording Sinking Fund Transactions, p. 267
o Additional Activities: Using Key Terms, Understanding Accounting
Concepts and Procedures, Case Study, Conducting an Audit with Alex,
Internet Connection, and Workplace Skills, pp. 262-263
o Open Book Quiz: Chapter Study Guide
From Century 21’s Textbook
o Guided Practice
 Work Together: Journalizing bonds payable transactions,
p. 339
 On Your Own: Journalizing bonds payable transactions, p. 255
o Independent Practice
 12-3 Journalizing Bonds Payable Transactions, p. 343

Lesson Plan 3.2 – Accounting for Long-Term Liabilities
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
o Additional Activities: Applied Communication, p. 345
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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 3.2 – Accounting for Long-Term Liabilities
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
Activity 3.2.1– Compile and Prepare
Local, State, and Federal Tax Reports
Course Title – Accounting II
Session Title– Compile and Prepare Local, State, and Federal Tax Reports
Lesson Objective – Students learn the issues involved in completing tax
returns, then fill out returns for individuals and businesses.
TEKS: 130.167.c.2.L. – perform accounting functions specific to corporate tax
accounting, including discussing the nature of corporate tax accounting and
applying record-keeping procedures for corporate tax accounting.
TAKS: R1, M10
Preparation
Materials Needed:
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Computer with internet and multimedia presentation software
Projection system, white board, note supplies
Teaching Strategies:
Students get online http://www.irs.gov/tax for an online understanding of taxes.
The site offers a teacher’s tool kit—a collection of tax related resources—to help
teachers integrate lessons about taxes into a variety of classroom settings. It
offers an e-mail address where students can forward questions.
Activity Outline:
1. Students prepare sample tax return from this IRS web site.
2. Volunteer Income Tax Assistant (VITA) is a program in Texas that
administers tax programs in ten primary cities. Students should go through
the free training on income tax returns.
3. Students take the test given by VITA to certify that the student can prepare a
simple tax return.
4. Numbers to call in Texas for this program are:
• South Texas 512-499-5439
• North Texas 214-767-1428
• Houston Area 281-721-7070
Activity 3.2.1 – Compile and Prepare Local, State and
Federal Tax Reports
Copyright
© Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
Assessment:
Performance
Element
Tax Returns on
Internet. (50
pts.)
Vocabulary Quiz (20
pts.)
VITA training and
certification. (30
pts.)
Exemplary
Acceptable
Unacceptable
Student completed
tax return accurately
and successfully on
internet. (50 pts.)
Student correctly
answered vocabulary
questions on quiz.
(20 pts.)
Student completed
training with VITA
and was certified
for completing simple
basic tax returns.
(30 pts.)
Student completed
tax return on internet
but has three errors.
(40 pts.)
Student did not
complete tax return
on internet. (0 pts.)
Student missed half
of vocabulary terms
on quiz. (10 pts.)
Student missed more
than half of
vocabulary terms on
quiz. (0 pts.)
Student received
certification but had
to have help. (20 pts.)
Student did not
participate in VITA
program and its
certification. (0 pts.)
Resources:
Web Sites:
BrainPower Technologies, Inc.
http://www.bonds-online.com/bondprofindex.html
Information about investing in bonds
Activity 3.2.1 – Compile and Prepare Local, State and
Federal Tax Reports
Copyright
© Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II