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Chapter 5: Question 7 (page 239)

BE5-7 (L03) Thomas Corporation鈥檚 adjusted trial balance contained the following liability accounts at December 31, 2017: Bonds Payable (due in 3 years) \(100,000, Accounts Payable \)72,000, Notes Payable (due in 90 days) \(22,500, Salaries and Wages Payable \)4,000, and Income Taxes Payable $7,000. Prepare the current liabilities section of the balance sheet.

Short Answer

Expert verified

The current liabilities of the business entity total$105,500.

Step by step solution

01

Definition of Salaries and Wages Payable

Salaries and wages payable are defined as the current liabilities of the business entity reporting the amount of money not paid to the employees for services they rendered in the previous period.

02

Current Liabilities Section

Particular

Amount $

Accounts Payable

$72,000

Note payable (due in 90 days)

22,500

Salaries and wages payable

4,000

Income tax payable

7,000

Total current liabilities

$105,500

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Most popular questions from this chapter

The creditors of Chester Company agree to accept promissory notes for the amount of its indebtedness with a proviso that two-thirds of the annual profits must be applied to their liquidation. How should these notes be reported on the balance sheet of the issuing company? Give a reason for your answer

A recent financial magazine indicated that the airline industry has poor financial flexibility. What is meant by financial flexibility, and why is it important?

In what section of the balance sheet should the following items appear, and what balance sheet terminology would you use?

(a) Treasury stock (recorded at cost).

(b) Checking account at bank.

(c) Land (held as an investment).

(d) Sinking fund.

(e) Unamortized premium on bonds payable.

(f) Copyrights.

(g) Pension fund assets.

(h) Premium on common stock.

(i) Long-term investments (pledged against bank loans payable).

A comparative balance sheet for Shabbona Corporation is presented below.

Particular

December 31

2017

2016

Assets

Cash

\(73,000

\)22,000

Accounts receivable

82,000

66,000

Inventory

180,000

189,000

Land

71,000

110,000

Equipment

260,000

200,000

Accumulated depreciation 鈥� Equipment

(69,000)

(42,000)

Total

\(597,000

\)545,000

Liabilities and stockholder鈥檚 equity

Account payable

\(34,000

\)47,000

Bonds payable

150,000

200,000

Common stock (\(1 par)

214,000

164,000

Retained earnings

199,000

134,000

Total

\)597,000

\(545,000

Additional information:

1. Net income for 2017 was \)125,000. No gains or losses were recorded in 2017.

2. Cash dividends of \(60,000 were declared and paid.

3. Bonds payable amounting to \)50,000 were retired through issuance of common stock.

Instructions

(a) Prepare a statement of cash flows for 2017 for Shabbona Corporation.

(b) Determine Shabbona Corporation鈥檚 current cash debt coverage, cash debt coverage, and free cash flow. Comment on its liquidity and financial flexibility.

Question: P5-1 (L03) (Preparation of a Classified Balance Sheet, Periodic Inventory) Presented below is a list of accounts in alphabetical order.

Accounts Receivable Inventory鈥擡nding

Accumulated Depreciation鈥擝uildings Land

Accumulated Depreciation鈥擡quipment Land for Future Plant Site

Accumulated Other Comprehensive Income Loss from Flood

Advances to Employees Noncontrolling Interest

Advertising Expense Notes Payable (due next year)

Allowance for Doubtful Accounts Paid-in Capital in Excess of Par鈥� preferred stock

Bond Sinking Fund Patents

Bonds Payable Payroll Taxes Payable

Buildings Pension Liability

Cash (in bank) Petty Cash

Cash (on hand) Preferred Stock

Cash Surrender Value of Life Insurance Premium on Bonds Payable

Commission Expense Prepaid Rent

Common Stock Purchase Returns and Allowances

Copyrights Purchases

Debt Investments (trading) Retained Earnings

Dividends Payable Salaries and Wages Expense (sales)

Equipment Salaries and Wages Payable

Freight-In Sales Discounts

Gain on Disposal of Equipment Sales Revenue

Interest Receivable Treasury Stock (at cost)

Inventory鈥擝eginning Unearned Subscriptions Revenue

Instructions Prepare a classified balance sheet in good form. (No monetary amounts are to be shown.)
See all solutions

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