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: 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 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: 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