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    Guided Exercises 1 Current Liabilities

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    charizza.ashley
    Burma Company should report a total of $7,000,000 as current liabilities at year-end. This includes accounts payable of $4,000,000, accrued expenses of $1,500,000, credit customer balances of $500,000, share dividend payable of $1,000,000, employee lawsuit claims of $400,000, and coupon redemption expenses of $600,000. Achilles Company should report $8,000,000 as current liabilities on December 31, 2020. This includes the $5,000,000 12% note payable and the $3,000,000 10% note payable, as the 12% note was ref

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    Guided Exercises 1 Current Liabilities

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    charizza.ashley
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    Burma Company should report a total of $7,000,000 as current liabilities at year-end. This includes accounts payable of $4,000,000, accrued expenses of $1,500,000, credit customer balances of $500,000, share dividend payable of $1,000,000, employee lawsuit claims of $400,000, and coupon redemption expenses of $600,000. Achilles Company should report $8,000,000 as current liabilities on December 31, 2020. This includes the $5,000,000 12% note payable and the $3,000,000 10% note payable, as the 12% note was ref

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    Guided-Exercises-1-Current-Liabilities

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    Burma Company should report a total of $7,000,000 as current liabilities at year-end. This includes accounts payable of $4,000,000, accrued expenses of $1,500,000, credit customer balances of $500,000, share dividend payable of $1,000,000, employee lawsuit claims of $400,000, and coupon redemption expenses of $600,000. Achilles Company should report $8,000,000 as current liabilities on December 31, 2020. This includes the $5,000,000 12% note payable and the $3,000,000 10% note payable, as the 12% note was ref

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    © All Rights Reserved
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    31 views2 pages

    Guided Exercises 1 Current Liabilities

    Uploaded by

    charizza.ashley
    Burma Company should report a total of $7,000,000 as current liabilities at year-end. This includes accounts payable of $4,000,000, accrued expenses of $1,500,000, credit customer balances of $500,000, share dividend payable of $1,000,000, employee lawsuit claims of $400,000, and coupon redemption expenses of $600,000. Achilles Company should report $8,000,000 as current liabilities on December 31, 2020. This includes the $5,000,000 12% note payable and the $3,000,000 10% note payable, as the 12% note was ref

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    ACC6

    Intermediate Accounting 2

    CURRENT LIABILITIES
    Guided Exercises

    1. Burma Company disclosed the following information about liabilities at year-end:


    Accounts payable, after deducting debit 4,000,000
    balances in suppliers’ accounts amount to
    P100,000
    Accrued Expenses 1,500,000
    Credit balances of customer’s accounts 500,000
    Share dividend payable 1,000,000
    Claims for increase in wages and allowance by 400,000
    employees of the entity, covered in a
    pending lawsuit.
    Estimated expenses in redeeming price 600,000
    coupons presented by customers

    What total amount should be presented as current liabilities at year-end?

    2. Able Company had the following amounts of long-term debt outstanding on December 31, 2020:
    14% term note, due 2021 30,000
    11% term note, due 2023 1,070,000
    8% note, due in 11 equal annual principal 1,100,000
    payments, plus interest beginning December
    31, 2021
    7% guaranteed debentures, due 2022 1,000,000
    Total 3,200,000
    The annual sinking fund requirement on the guaranteed debentures is P40,000 per year. What
    total amount should be reported as current liabilities on December 31, 2020?

    3. Achilles Company reported the following liability balances on December 31, 2020.
    12% note payable issued on March 1, 2019, 5,000,000
    maturing on March 1, 2021
    10% note payable issued on October 1, 2019, 3,000,000
    maturing October 1, 2021
    The 2020 financial statements were issued on March 31, 2021. On January 31, 2021, the entire
    P5,000,000 balance of the 12% note payable was refinanced through issuance of a long-term
    obligation payable lump sum. Under the loan agreement for the 10% note payable, the entity has
    the discretion to refinance the obligation for at least 12 months after December 31, 2020. What
    amount of the notes payable should be classified as current on December 31, 2020?

    4. Cobb Company sells gift certificates redeemable only when merchandise is purchased. Upon
    redemption, Cobb Company recognizes the unearned revenue as realized. Information for the
    current year:
    Unearned revenue, January 1 650,000
    Gift certificates sold 2,250,000
    Gift certificates redeemed 1,950,000
    Gift certificates unredeemed for a long time 100,000
    ACC6
    Intermediate Accounting 2

    Cost of Goods Sold 60%


    What amount should be reported as unearned revenue at year end?

    5. Kent Company, a realty entity, maintains escrow accounts and pays real estate taxes for the
    mortgage customers. Escrow funds are kept in interest-bearing accounts. Interest, less 10%
    service fee, is credited to the mortgagee’s account and used to reduce future escrow payments.
    The entity provided the following additional information for the current year:
    Escrow accounts liability, January 1 700,000
    Escrow payments received 1,580,000
    Real estate taxes paid 1,720,000
    Interest on escrow funds 50,000
    What amount should be reported as escrow accounts liability on December 31?

    6. Nature Company has an agreement to pay the sales manager a bonus of 5% of the entity’s
    earnings. The income for the year before bonus and tax is P5,250,000. The income tax rate is 30%
    of income after bonus. Determine the bonus under each of the following independent
    assumptions:
    a. Bonus is a certain percent of the income before bonus and before tax.
    b. Bonus is a certain percent of income after bonus but before tax
    c. Bonus is a certain percent of income after bonus and after tax
    d. Bonus is certain percent of income after tax but before bonus.

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