Week 12 — Current Liabilities and Payroll

Why this matters

Whether you run a register at a campus bookstore, manage a crew at a landscaping company, or read your own first paycheck, knowing why take-home pay is smaller than gross pay, and why collected sales tax is a debt, shows what a business really owes.

In plain language

Every business owes money in the short run: to suppliers, to lenders, to the government, and to its own workers. Those debts are its current liabilities (the amounts it must pay, or the work it must do, within about a year). This week you learn the common ones and how to record each. Most of the week is about payroll (the pay a business owes its employees and the taxes that ride along with it). You will find out why a worker who earns $1,140 in a week takes home less, and why the business pays more.

• Already covered: Week 4's accrued expenses and Week 5's current liabilities.
• This week: notes, sales tax, and payroll from gross pay to net pay.
• How they connect: a payroll is an accrued expense with more lines.
• Where we're going next: Week 13, Long-Term Liabilities.

Focus

What does a business owe in the short run, and why does one paycheck create debts to people other than the employee?

By the end of this module, you should be able to:

• [ ] record a note payable, sales tax, and a loan's current portion
• [ ] compute gross pay with overtime and net pay at the 2026 rates
• [ ] apply the Social Security wage base
• [ ] record the payroll and the employer's own payroll taxes

To-do

Plan your week

1. Read Chapter 12 (~40–50 minutes), then the lecture and slides.
2. Work the lecture tutorial (60–90 minutes).
3. Do the practice set (15–25 minutes).
4. Do the Accounting Workshop (about 90 minutes), the discussion, and the assignment.
5. Take the quiz.

This week's checkpoint: build the mechanic's paycheck from $1,140 of gross pay to $957.79 of net pay, and record it in one balanced entry.

You've got this

Take it in order, and ask your instructor if a step snags.

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