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Chapter 11: 14RQ (page 604)
Curtis Company is facing a potential lawsuit. Curtis鈥檚 lawyers think that it is reasonably possible that it will lose the lawsuit. How should Curtis report this lawsuit?
Reasonable possible contingent liability is recorded in the notes to the financial statement.
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Rios Raft Company had the following liabilities.
a. Accounts Payable
b. Note Payable due in 3 years
c. Salaries Payable
d. Note Payable due in 6 months
e. Sales Tax Payable
f. Unearned Revenue due in 8 months
g. Income Tax Payable
Determine whether each liability would be considered a current liability (CL) or a long-term liability (LTL).
Macintosh Company has monthly salaries of \(26,000. Assume Macintosh pays all the standard payroll taxes, no employees have reached the payroll tax limits, total income tax withheld is \)2,000, and the only payroll deductions are payroll taxes. Journalize the accrual of salaries expense, accrual of employer payroll taxes, and payment of employee and employer payroll taxes for Macintosh Company.
What is the difference between gross pay and net pay?
Question:The income statement for Vermont Communications follows. Assume VermontCommunications signed a 3-month, 3%, \(6,000 note on June 1, 2018, and that thiswas the only note payable for the company.
Vermont Communications | ||
Income Statement | ||
Year Ended July 31, 2018 | ||
Net Sales Revenue | \) 26,500 | |
Cost of Goods Sold | 12,200 | |
Gross Profit | 14,300 | |
Operating Expenses: | ||
Selling Expenses | \( 690 | |
Administrative Expenses | 1,550 | |
Total Operating Expenses | 2,240 | |
Operating Income | 12,060 | |
Other Income and (Expenses): | ||
Interest Expense | ? | |
Total Other Income and (Expenses) | ? | |
Net Income before Income Tax Expense | ? | |
Income Tax Expense | 2,410 | |
Net Income | \) ? | |
Requirements
1. Fill in the missing information for Vermont鈥檚 year ended July 31, 2018, incomestatement. Round to the nearest dollar.
2. Compute the times-interest-earned ratio for the company. Round to twodecimals.
Sell-Soft is the defendant in numerous lawsuits claiming unfair trade practices. SellSoft has strong incentives not to disclose these contingent liabilities. However, GAAP requires that companies report their contingent liabilities.
Requirements
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