Chapter 13 Solutions

EXERCISE 13-1 (10–15 minutes)

(a) Current liability.

(b) Current liability.

(c) Current liability or long-term liability depending on term of warranty.

(d) Current liability.

(e) Footnote disclosure (assume not probable and/or not reasonably estimable).

(f) Current liability.

(g) Current or noncurrent liability depending upon the time involved.

(h) Current liability.

(i) Current liability.

(j) Current liability.

(k) Current liabilities or long-term liabilities as a deduction from face value of note.

(l) Current liability.

(m) Current liability.

(n) Current liability.

(o) Footnote disclosure.

(p) Separate presentation in either current or long-term liability section.

EXERCISE 13-2 (15–20 minutes)

(a) | Sept. 1 | Purchases | 50,000 | |

| | Accounts Payable | | 50,000 |

| | | | |

| Oct. 1 | Accounts Payable | 50,000 | |

| | Notes Payable | | 50,000 |

| | | | |

| Oct. 1 | Cash | 75,000 | |

| | Discount on Notes Payable | 6,000 | |

| | Notes Payable | | 81,000 |

| | | | |

(b) | Dec. 31 | Interest Expense | 1,000 | |

| | Interest Payable | | |

| | ($50,000 X 8% X 3/12) | | 1,000 |

| | | | |

| Dec. 31 | Interest Expense | 1,500 | |

| | Discount on Notes Payable | | |

| | ($6,000 X 3/12) | | 1,500 |

EXERCISE 13-2 (Continued)

(c) | 1. | Note payable | $ 50,000 |

| | Interest payable | 1,000 |

| | | $ 51,000 |

| | | |

| 2. | Note payable | $ 81,000 |

| | Less discount ($6,000 – $1,500) | 4,500 |

| | | $ 76,500 |

EXERCISE 13-8 (10–15 minutes)

Salaries and Wages Expense | 480,000 | |

Withholding Taxes Payable | | 80,000 |

FICA Taxes Payable* | | 28,040 |

Union Dues Payable | | 9,000 |

Cash | | 362,960 |

*[($480,000 – $140,000) X 7.65% = $26,010] | | |

$140,000 X 1.45% = $2,030; $26,010 + $2,030 =...