Following are the five events of DDT CORPORATION: a. On December 31, purchased a machinery at a price of $ 6,00,000 and signed a note payable due in six months with interest of 9 percent. b. On December 31, estimated that warranty work costing $ 5,00,000 will need to be performed in coming months on those products which were sold in this year with a 12-month warranty. c. On December 31, pay checks totaling $ 289,000 were issued to employees .As these cheques were issued after banking hours on December 31, no cash will be disbursed from payroll bank account until early in January next year. The amounts withheld from employee’ pay and payroll taxes on the employer, $ 51000 and $ 27000 respectively, were remitted to tax authorities next month. d. On November 1, borrowed $ 900000 from a bank signing a 90 day note payable for $ 918000, with interest included in the face amount. e. On November 3, signed a contract for the purchase of 30000 barrels of oil per month in the coming year at a price of $ 30 per barrel. Required: Identify the $ amounts that should appear in the current or long term liabilities sections at the year-end balance sheet of the current year and also identify figures with relevant information that should be disclosed in the notes to financial statements. Briefly explain reasons underlying your answers. Assume the financial statements are completed and issued on January 15, next year.
Q 4. Following are the five events of DDT CORPORATION:
a. On December 31, purchased a machinery at a price of $ 6,00,000 and signed a note payable
due in six months with interest of 9 percent.
b. On December 31, estimated that warranty work costing $ 5,00,000 will need to be performed
in coming months on those products which were sold in this year with a 12-month warranty.
c. On December 31, pay checks totaling $ 289,000 were issued to employees .As these cheques
were issued after banking hours on December 31, no cash will be disbursed from payroll bank account until early in January next year. The amounts withheld from employee’ pay and payroll taxes on the employer, $ 51000 and $ 27000 respectively, were remitted to tax authorities next month.
d. On November 1, borrowed $ 900000 from a bank signing a 90 day note payable for $ 918000,
with interest included in the face amount.
e. On November 3, signed a contract for the purchase of 30000 barrels of oil per month in the
coming year at a price of $ 30 per barrel.
Required: Identify the $ amounts that should appear in the current or long term liabilities sections at
the year-end balance sheet of the current year and also identify figures with relevant
information that should be disclosed in the notes to financial statements.
Briefly explain reasons underlying your answers.
Assume the financial statements are completed and issued on January 15, next year.
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