Week 2 Homework

EXERCISE 13-1

(a) Current liability.

(b) Current liability.

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

(d) Current liability.

(e) Current liability.

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

(m) Current liability.

(n) Current liability.

(o) Footnote disclosure.

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

EXERCISE 13-2

(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.................................. 1,000

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

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

Discount on Notes Payable............ 1,500

($6,000 X 3/12)

(c)

(1) Note payable $50,000

Interest payable 1,000...