Chapiter 11
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Chapter 9 – Homework Solutions
Exercise 9-2
JACKIE COMPANY
BALANCE SHEET
DECEMBER 31, 2012
Current liabilities:
Accounts payable $ 24,400
Notes payable, 10%, due June 2, 2013 $1,000
Less: Discount on notes payable 150 850
Current maturities of long-term debt 6,900
Interest payable 3,010
Wages payable 6,000
Unearned revenue 4,320
Income taxes payable 61,250
Total current liabilities $106,730
Exercise 9-3
The treatment of the items should be as follows:
Taxes payable—Current liability
Accounts receivable—Current asset
Notes payable, 9%, due in 90 days—Current liability
Investment in bonds—Long-term Asset
Capital stock—Stockholders' equity
Accounts payable—Current liability
Estimated warranty payable in 2013—Current liability
Retained earnings—Stockholders' equity
Trademark—Intangible asset
Mortgage payable—$10,000 due in 2013 should be Current liability.
The remaining portion should be Long-term liability.
Exercise 9-5
1. KRUSE COMPANY
BALANCE SHEET
DECEMBER 31, 2012
Current liabilities:
Accounts payable $ 55,000
Notes payable, 12%, due in 60 days 20,000
Taxes payable 15,000
Salaries payable 10,000
Total current liabilities $ 100,000
2. Working capital = Current assets – Current liabilities
= $300,000* – $100,000
= $200,000
*Current assets = Cash $ 15,000
Accounts receivable 180,000
Less: Allowance (20,000)
Marketable Securities 40,000
Inventory 85,000
$ 300,000
3. Current ratio = Current assets/Current liabilities
= $300,000/$100,000
= 3:1
Kruse appears to have sufficient current assets to meet its short-term obligations (pay its current liabilities).
Exercise 9-7
1. 2012
July 1 Cash 25,000
Note Payable 25,000
To record borrowing by note.
2. Dec. 31 Interest Expense...
