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A series of accounting problems related to current liabilities, providing detailed solutions for each. It covers various aspects of current liabilities, including accounts payable, unearned revenue, and deferred revenue, with practical examples and explanations. Suitable for high school students studying accounting principles and provides a valuable resource for understanding and applying concepts related to current liabilities.
Typology: Summaries
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Held for trading financial liabilities 1,000, Current portion of Note payable 1,000, Unearned revenue 300, Dividends payable 800, Current liabilities (^) 3,600,
5. Solution: Unadjusted accounts payable 2,200, Shipment lost - FOB S.P. 40, Purchase returns (70,000) Adjusted accounts payable 2,170, 6. Solution: Currently maturing long-term debt (a)^ 10,000, 5-year loan that is payable on demand (b)^ 6,000, Loan with breach of provision (b)^ 14,000, Current liabilities 30,000, (a) (^) “An entity classifies its financial liabilities as current when they are due to be se led within twelve months after the reporting period, even if : a) the original term was for a period longer than twelve months, and b) an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the financial statements are authorised for issue.” (PAS 1.72) (b) (^) “When an entity breaches a provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand , it classifies the liability as current , even if the lender agreed, after the
1. Solution: a. Trade accounts payable gross of debit balance, unreleased check, and postdated check (600,000 + 10,000 + 8,000 + 4,000). P622, b. Advances from customers (Credit balance in customers’ accounts)
c. Financial liability designated at FVPL 100, d. Current portion of bonds payable 200, e. Interest payable on note payable (P200,000 x 12% x 3/12)
g. Unearned rent 8, Total current liabilities P940, 0
2. Solution: Unadjusted balance 1,300, (a) - (b) (40,000) (c) 60, Adjusted accounts payable 1,320, 3. Solution: Accounts payable and accrued interest
12% note payable issued Nov. 1, 2004 maturing July 1, 2006
10% debentures payable (current portion) 500, Total current liabilities
8. Solution: Advertising expense - December 35, Rent expense (120,000 x 1/2) 60, Contingent rent [(9M - 6M) x 5%] 150, Accrued liabilities 245, PROBLEM 4: MULTIPLE CHOICE – THEORY
Solution: Unearned revenue ignored beg. Redemptions - prior yr. ignored 250,000 Sales - 20x Redemptions - 20x3 175, Estimate of sales not to be redeemed 25, end. 50, The gift certificates sold in 20x2 and their related redemptions are ignored because they have expired during the current year. Hence, they do not affect the year-end liability.
5. C (125,000 + 200,000 expiring in 20x4) + 140,000 expiring in 20x5 = 465,000 balance of unearned subscription revenue on Dec. 31, 20x
returns 286, end 674,
