Acct 551 Week 2 Homework

E13-1 (Balance Sheet Classification of Various Liabilities) How would each of the following items be reported on the balance sheet?

(a) Accrued vacation pay. Current liability

(b) Estimated taxes payable. Current liability

(c) Service warranties on appliance sales. Current or long-term liability

(d) Bank overdraft. Current liability

(e) Personal injury claim pending. Disclosed in notes

(f) Unpaid bonus to officers. Current liability

(g) Deposit received from customer to guarantee performance of a contract. Current or noncurrent liability

(h) Sales taxes payable. Current liability

(i) Gift certificates sold to customers but not yet redeemed. Current liability

(j) Premium offers outstanding. Current liability

(k) Discount on notes payable. Deduction from face value of note

(l) Employee payroll deductions unremitted. Current liability

(m) Current maturities of long-term debts to be paid from current assets. Current liability

(n) Cash dividends declared but unpaid. Current liability

(o) Dividends in arrears on preferred stock. Disclosed in notes

(p) Loans from officers. Current or long term liability section

E13-2 (Accounts and Notes Payable) The following are selected 2012 transactions of Darby Corporation.

Sept. 1 | Purchased inventory from Orion Company on account for $50,000. Darby records purchases gross and uses a periodic inventory system. |

Oct.  1 | Issued a $50,000, 12-month, 8% note to Orion in payment of account. |

Oct.  1 | Borrowed $75,000 from the Shore Bank by signing a 12-month, zero-interest-bearing $81,000 note. |

Instructions

(a) Prepare journal entries for the selected transactions above.

Purchases 50,000

Accounts Payable 50,000

Accounts Payable 50,000

Notes Payable 50,000

Cash 75,000

Discount on Notes Payable 6,000

Notes Payable 81,000

(b) Prepare adjusting entries at December 31.

Interest Expense 1000

Interest Payable 1000

(50,000x8%x3/12)

Interest Expense 1500

Discount on Notes...