Professional Documents
Culture Documents
Current
Liabilities
(Kısa Vadeli Yabancı
Kaynaklar / Cari Borçlar)
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Liabilities
classified according to their due dates:
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Current Liabilities
1. Short Term Bank Loans
2. Current Portion of Long-term Debt
3. Accounts Payable
4. Notes Payable
5. Accruals
6. Unearned Revenues
7. Payroll Liabilities
8. Corporate Income Taxes
9. Value Added Taxes
10. Product Warranty Liability
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Current Portion of Long-term Debt
The portion of LT-debt that matures within one year at the date of the balance
sheet (i.e. the installments of LT-debt to be paid within the next 12 months) -
should be classified as a current liability
Aycan Industries borrows TL250.000 from World Bank on 31 May 2005 with a
term of 4 years, semi-annual installments, 1 year grace period. B/S Date: 31 Dec’05
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Notes Payable
Interest Separately Stated on the Note
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When the note is issued
Date Account Title and Description Debit Credit
31.Ağu.04 Cash 18.000
Notes Payable 18.000
To record the note issued to
UBZ Bank
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Payroll Liabilities (Required)
Employee Income Taxes (Employee obligation - paid by
employer & deducted from gross salary) – Filed w/tax office on the
20th and paid on the 26th of the following month
Stamp Duty (Employee obligation – paid by employer & deducted
from gross salary) – Paid together w/income taxes.
Social Security Premiums* (Employer & Employee
obligations, i.e. premiums by the employer & premiums by the
employee) – Paid on the last day of the following month.
Unemployment Insurance Premium (Employee &
Employer obligations) – Paid together w/SSK premiums
* There are three operating social security agencies in Turkey: SSK, Emekli Sandığı
and Bağkur. For the purposes of this course, we will focus on SSK.
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Sample Payroll – pg. 336
TEM P O
CO RP O RATIO N
P AYRO LL O F NO V EM BER 2 0 0 5
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Payroll Entry
Date AccountTitleandDescription Debit Credit
30.Kas SalaryExpense (gross pay) 2.000
SSKpremiums (employer) 390
UnemploymentInsurancePremium (employer) 60
Cash (netpay) 1.444
Recorded as payable TaxesPayable-IncomeTaxes (employee-incl.in gross salary) 224
& paid on the 26th of
the following month TaxesPayable-StampDuty (employee-0.6%of gross pay) 12
SSKPremiumsPayable * Recorded as payable & paid
on the last day of the
770
TorecordNovemberpayroll following month
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Value Added Taxes
VAT is reported and paid monthly. Each month’s
VAT declaration must be filed with the Tax Office
on the 20th and paid on the 26th of the following
month.
amount of VAT paid for goods and services
purchased is deducted from the amount of VAT
received on sales of goods and services
if VAT on sales > the VAT on purchases → the
entity is required to pay the difference to the Tax
Office
if VAT on purchases exceeds the VAT on sales →
the difference is carried forward to the next month
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Accounting for VAT transactions
14 April: Purchased 10 items for TL17.110 on
credit including 18% VAT
20 April: Sold 22 items for TL 37.642 on credit
including 18% VAT
20 May: Filed the VAT return
26 May: Paid the necessary amount
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VAT entries
Date AccountTitleand Description Debit Credit
14.Nis Merchandise Inventory 14.500
VAT Deductible(Receivable from the State - İndirilecek KDV) 2.610
Accounts Payable 17.110
To record merchandise purchased on credit
20.Nis Accounts Receivable 37.642
Sales 31.900
VAT Payable 5.742
To record sales made on April 20
26.May VAT Payable 5.742
VAT Deductible 2.610
Cash(Paid to the State) 3.132
To record VAT return filed for April
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VAT entries
Date AccountTitleandDescription Debit Credit
VAT Deductible (VAT paid for purchases) > VAT Payable (VAT
received from sales), the difference becomes VAT Carried Forward
(Devreden KDV) and is deducted from the next month’s VAT Payable
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Product Warranty Liabilities-1
Sales with product warranty are customary in most industires. In Turkey, according to the new Consumer Law, there is a 2-year minimum parts &
service warranty for industrial goods against production defects.
Matching Principle - warranty expenses of sales in a period should be recorded in the same period
Product Warranty Expense is an estimation based on past experience (Since the company
cannot know the exact amount of the warranty expense at the time of the sale)
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Product Warranty Liabilities-2
4 January 2005, one of the customers brought back a TV set purchased in
2004, and the Company agreed to replace the part of the set that was
defective. The cost of the replaced part was TL 775 on 4 January 2005.
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Contingent Liabilities
(Şarta Bağlı Yükümlülükler)
A potential liability arising from a past transaction and that depends on a
future event.
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Common Financial Ratios
Net Working Capital = Current Assets - Current Liabilities
365
Average Payment Period =
Accounts Payable Turnover
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