Liabilities on the Balance Sheet For each of the following situations, indicate the amount shown as current or long-term liability on the balance sheet of Anchor, Inc., at December 31: a. Anchor’s general ledger shows a credit balance of $125,000 in Long-Term Notes Payable. Of the amount, a $25,000 installment becomes due on June 30 of the following year. b. Anchor estimates its unpaid income tax liability for the current year is $34,000; it plans to pay this amount in March of the following year. c. On December 31, Anchor received a $15,000 invoice for merchandise shipped on December 28. The merchandise has not yet been received. The merchandise was shipped F.O.B. shipping point. d. During the year, Anchor collected $10,500 of state sales tax. At year-end, it has not yet remitted $1,400 of these taxes to the state department of revenue. e. On December 31, Anchor’s bank approved a $5,000, 90-day loan. Anchor plans to sign the note and receive the money on January 2 of the following year. Current Liability Long-Term Liability a. Balance in Long-Term Notes Payable Answer Answer b. Unpaid income tax liability Answer Answer c. Merchandise shipped F.O.B. Shipping Point Answer Answer d. Sales tax collected Answer Answer e. Bank loan Answer Answer
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Liabilities on the Balance Sheet
For each of the following situations, indicate the amount shown as current or long-term liability on the balance sheet of Anchor, Inc., at December 31:
a. Anchor’s general ledger shows a credit balance of $125,000 in Long-Term Notes Payable. Of the amount, a $25,000
installment becomes due on June 30 of the following year.
b. Anchor estimates its unpaid income tax liability for the current year is $34,000; it plans to pay this amount in March of the following year.
c. On December 31, Anchor received a $15,000 invoice for merchandise shipped on December 28. The merchandise has not yet been received.
The merchandise was shipped F.O.B. shipping point.
d. During the year, Anchor collected $10,500 of state sales tax. At year-end, it has not yet remitted $1,400 of these taxes to the state department of revenue.
e. On December 31, Anchor’s bank approved a $5,000, 90-day loan. Anchor plans to sign the note and receive the money on January 2 of the following year.
| Current Liability | Long-Term Liability | |
|---|---|---|
| a. Balance in Long-Term Notes Payable | Answer | Answer |
| b. Unpaid income tax liability | Answer | Answer |
| c. Merchandise shipped F.O.B. Shipping Point | Answer | Answer |
| d. Sales tax collected | Answer | Answer |
| e. Bank loan | Answer | Answer |
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
