1.Liabilities n. 负债
Definition: a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.
Present obligation 现在的义务
Past events 由过去的交易或事项引起的
Outflow from the entity of resources embodying economic benefits 经济利益的付出
Probable （contingent liabilities或有负债） 可能的
Measurable 可以计量的
2.Classification: current liabilities and non-current liabilities
Current liabilities 流动负债—accounts payable应付账款, current notes payable应付票据, dividends payable应付股利, advance from customers预收账款
Non-current 长期负债—long-term loan长期借款, bonds payable 应付债券
3.Measurement of liabilities:
Current liabilities: at face value 以面值计量
Non-Current liabilities: at net present value （NPV） 净现值
4.Lecture examples illustration
Lecture examples1:
On Jan. 5, X company bought office furniture from Y company for $15,000 on credit and agree to pay the amount by the end of June. X company cannot pay its $15,000 account with Y company on time. As an accommodation, on July 1, Y company agree to accept X company’s 3 months note with the face value of $15,000 at the rate of 5%.
Please do necessary accounting entries for X company.
January 5 Dr：Fixed assets—office furniture 15,000 固定资产
Cr：Account payable 15,000 应付账款
July 1 Dr：Account payable—Y company 15,000 应付账款
Cr：Notes payable 15,000 应付票据
Interest: $15,000× 5% =$750
July 31/August 31/Sept. 30
Dr：Interest expense 750 利息支出
Cr：Interest payable 750 应付利息
October 1 Dr：Notes payable 15,000 应付票据
Interest payable 2,250 应付利息
Cr：Bank deposit 17,250 银行存款
Lecture example 2:
On March 1, Lucky Travel Agency Company received $5000 advance payment from ABC company for its employee training tour. By the end of March, $3000 has been earned by Lucky Travel Agency Company y by provide tour guide service. Make the journal entry for Lucky Travel Company.
March 1. Dr：Cash 5,000 现金
Cr：Advance from customer 5,000 预付货款
March 31 Dr：Advance from customer 3,000 预付货款
Cr：Service revenue 3,000 主营业务收入
Lecture example 3:
The board of director of Thomason telecom company declared a annual dividend of $1.5 per share on 10,000 shares of common stock on Nov. 20. Cash dividends will be paid on Dec. 20. Make the journal entry for the company.
Nov. 20 Dr：Cash dividends 15,000 现金股利
Cr：Dividends payable 15,000 应付股利
Dec. 20 Dr：Dividends payable 15,000 应付股利
Cr：Cash 15,000 现金
5.Accounting requirements for Debentures 债券的会计处理
Bonds/Debentures
bond n. 债券 national bond 国家公债
debenture n. 债券
Face value/par value 面值
Face rate/coupon rate 债券利率
Market rate 市场利率
Issuing of Bond
Issued at the face value （par value） 平价发行
at a premium above the face value 溢价发行（face rate > market fate）
at a discount on the face value 折价发行 （face rate < market fate）
Lecture example — Issue of bonds at Par Value 平价发行债券:
Lake company issues bonds on Jan 1, 2007, with a face value of $500,000 to be paid in 10 years and a 8% coupon rate of interest payable semiannually. （effective rate 4%, n=20）
Dr：Cash 500,000
Cr：Bonds payable 500,000
Dr：Interest expense 20,000
Cr：Cash 20,000 （每次支付利息时做此分录）
Dr：Bond 500,000
Cr：Cash 500,000 （收回债券，返还票面金额）
Lecture example — bond issued at a premium 溢价发行债券：
Lake company issues bonds on Jan 1, 2007, with a face value of $500,000 to be paid in 10 years at a 8% coupon rate of interest payable semiannually. The market interest is 6% when the bonds issued. （effective rate 3%, n=20）
Present value of principal repayment=277,000
Present value of interest payments=294,540
Present value of future cash flows=574,540
Premium =574,540-500,000=74,540
Dr：Cash 574,540
Cr：Bonds （par value） 500,000
Premium on bonds 74,540
Dr：Interest expense 17,236
Premium on bonds 2,764
Cr：Cash 20,000
Dr：Interest expense 17,153
Premium on bonds 2,846
Cr：Cash 20,000
Lecture example 2— bond issued at a discount 折价发行债券
Lake company issues bonds on Jan 1, 2007, with a face value of $500,000 to be paid in 10 years and a 8% coupon rate of interest payable semiannually. The market interest is 10% when the bonds issued. （effective rate 5%, n=20）
Present value of principal repayment=188,500
Present value of interest payments=249,240
Present value of future cash flows = 473,740
Discount =500,000－473,740=26,260
Dr：Cash at bank 437,740
Discount on bonds 26,260
Cr：Bonds payable 500,000
Dr：Interest expense 21,887
Cr：Discount on bonds 1,887
Cash 20,000
Dr：Interest expense 21,981
Cr：Discount on bonds 1,981
Cash 20,000
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