A finished ACC-371 Topic 2 year-end accrual schedule example, accruing four obligations no invoice reveals and classifying a maturing loan by whether its refinancing was secured before issue. Searches like "acc 371 topic 2 assignment example", "acc371 topic 2 sample" and "acc-371 topic 2 example" land here.
What a finished ACC-371 Topic 2 year-end accrual schedule looks like
The schedule is a single worksheet with one row per obligation, a column for the criterion that requires it and a column for the amount, every figure illustrative. Wages for the three working days after the final December payday come to $36,000, and employer payroll taxes at an illustrative 7.65 percent add $2,754. Vested vacation of $18,500 is accrued only after the four conditions for compensated absences are checked against the company's written policy. Interest on a $200,000 note at 6 percent, issued October 1, adds $3,000 for three months. The accruals total $60,254. The loan row works differently: the $500,000 note matures in March, and the schedule keeps it current unless a long-term refinancing agreement existed before the statements were issued. One was signed in February, ahead of issuance, so the note moves to noncurrent with a disclosure.
How an ACC-371 Topic 2 example is structured
The schedule is ordered from the obligation easiest to overlook to the one easiest to misclassify. It opens with the cutoff facts: the last payday, the number of working days after it, the note terms and the date the statements will be issued. A second part accrues wages and then the payroll taxes that follow them, since the tax obligation exists only because the wages do. The third part walks compensated absences through its four conditions, services already rendered, rights that vest or accumulate, probable payment and a reasonable estimate, before any amount is entered. Interest is computed fourth from the note's date, rate and face amount. The fifth part addresses the March loan, setting out the refinancing condition and the February agreement that satisfies it. Adjusting entries come last, with current liabilities totaled before and after the reclassification so the change in working capital is visible.
Cutoff facts gathered before any amount
The last payday, the working days after it and the date the statements will be issued are fixed first, because every accrual below depends on one of them.
Payroll taxes riding on accrued wages
The employer's share of payroll tax is accrued on the same three days of wages, a companion liability that schedules built from invoices regularly leave out.
Vacation checked against four conditions
Rendered service, vesting or accumulation, probable payment and a reasonable estimate are each confirmed from the policy before the $18,500 is recorded as owed.
Interest accrued from the note date
Three months at 6 percent on $200,000 gives $3,000, computed from the note's terms rather than waited for, since the lender sends no bill before payment falls due.
Refinancing decides the March loan
The note stays current unless a long-term agreement was in place before issue, and the February signing is the fact that moves it to noncurrent.
Where marks go in ACC-371 Topic 2
Accrual schedules drop points on the obligations they never list. A close that records only invoiced items misses the three unpaid working days, and a schedule that catches the wages often still misses the employer taxes attached to them. Vacation accrued as a round estimate, with none of the four conditions confirmed against the policy, applies the rule without showing that it applies. Interest counted from January rather than from the note date misstates the period by exactly the months the schedule was meant to capture. The loan draws the sharpest deductions: moving it to noncurrent because management intends to refinance, with no agreement or issuance before the statements go out, classifies on intention alone. Current liabilities totaled without the reclassification shown separately leave a reader unable to see why working capital improved.
Get an ACC-371 Topic 2 example written to your instructions
Send your ACC-371 Topic 2 instructions, the rubric and the payroll, note or loan details your section supplied. We write a custom example to them, with each unbilled obligation accrued, the compensated absence conditions confirmed, interest dated from the note and any maturing debt classified on its refinancing facts, in 24 to 48 hours. The first one costs nothing.
ACC-371 Topic 2 questions, answered
Why accrue wages that will be paid in a few days anyway?
Because the employees have already earned them. The service was performed in December, so the obligation belongs in December, whatever day the paychecks clear. Leaving it out understates both expense and liabilities for the year, and at a company with a large payroll three days can be material. The schedule computes the amount from the daily payroll figure rather than estimating it loosely.
Does all unused vacation have to be accrued?
Only vacation that meets all four conditions. The employees must already have rendered the service, the right must vest or carry forward, payment must be probable and the amount must be estimable. A use-it-or-lose-it policy that forfeits balances at year end may leave little or nothing to accrue. Sick pay that accumulates but does not vest is often treated differently, and course texts usually note that exception.
Can a loan due within a year be shown as long-term?
It can, under US GAAP, when the company intends to refinance it on a long-term basis and demonstrates the ability to do so before the statements are issued, either by completing the refinancing or by signing a qualifying financing agreement. Intention alone is not enough. The February agreement in the example satisfies the condition, and a note disclosure explains the reclassification to the reader.