1 Role Of Accounting In Society 2 Introduction To Financial Statements 3 Analyzing And Recording Transactions 4 The Adjustment Process 5 Completing The Accounting Cycle 6 Merchandising Transactions 7 Accounting Information Systems 8 Fraud, Internal Controls, And Cash 9 Accounting For Receivables 10 Inventory 11 Long-term Assets 12 Current Liabilities 13 Long-term Liabilities 14 Corporation Accounting 15 Partnership Accounting 16 Statement Of Cash Flows Chapter12: Current Liabilities
Chapter Questions Section: Chapter Questions
Problem 1MC: Which of the following is not considered a current liability? A. Accounts Payable B. Unearned... Problem 2MC: A company regularly purchases materials from a manufacturer on credit. Payments for these purchases... Problem 3MC: The following is selected financial data from Block Industries: How much does Block Industries have... Problem 4MC: A ski company takes out a $400,000 loan from a bank. The bank requires eight equal repayments of the... Problem 5MC: Nido Co. has a standing agreement with a supplier for purchasing car parts. The terms of the... Problem 6MC: A client pays cash in advance for a magazine subscription to Living Daily. Living Daily has yet to... Problem 7MC: Lime Co. incurs a $4,000 note with equal principal installment payments due for the next eight... Problem 8MC: Which of the following best describes a contingent liability that is likely to occur but cannot be... Problem 9MC: Blake Department Store sells television sets with one-year warranties that cover repair and... Problem 10MC: What accounts are used to record a contingent warranty liability that is probable and estimable but... Problem 11MC: Which of the following best describes a contingent liability that is unlikely to occur? A. remote B.... Problem 12MC: Which of the following accounts are used when a short-term note payable with 5% interest is honored... Problem 13MC: Which of the following is not a characteristic of a short-term note payable? A. Payment is due in... Problem 14MC: Sunlight Growers borrows $250,000 from a bank at a 4% annual interest rate. The loan is due in three... Problem 15MC: Marathon Peanuts converts a $130,000 account payable into a short-term note payable, with an annual... Problem 16MC: An employee earns $8,000 in the first pay period. The FICA Social Security Tax rate is 6.2%, and the... Problem 17MC: Which of the following is considered an employer payroll tax? A. FICA Medicare B. FUTA C. SUTA D. A... Problem 18MC: Employees at Rayon Enterprises earn one day a month of vacation compensation (twelve days total each... Problem 19MC: An employee and employer cost-share health insurance. If the employee covers three-fourths of the... Problem 1Q: Why is Accounts Payable classified as a current liability? Problem 2Q: On which financial statement are current liabilities reported? Problem 3Q: What is the difference between a noncurrent liability and a current liability? Problem 4Q: How is the sales tax rate usually determined? Does the company get to keep the sales tax as earned... Problem 5Q: If Bergen Air Systems takes out a $100,000 loan, with eight equal principal payments due over the... Problem 6Q: What amount is payable to a state tax board if the original sales price is $3,000, and the tax rate... Problem 7Q: What specific accounts are recognized when a business purchases equipment on credit? Problem 8Q: What is a contingent liability? Problem 9Q: What are the two FASB required conditions for a contingent liability to be recognized? Problem 10Q: If a bankruptcy is deemed likely to occur and is reasonably estimated, what would be the recognition... Problem 11Q: Name the four contingent liability treatments. Problem 12Q: A companys sales for January are $250,000. If the company projects warranty obligations to be 5% of... Problem 13Q: What is a key difference between a short-term note payable and a current portion of a noncurrent... Problem 14Q: What business circumstance could bring about a short-term note payable created from a purchase? Problem 15Q: What business circumstance could produce a short-term notes payable created from a loan? Problem 16Q: Jain Enterprises honors a short-term note payable. Principal on the note is $425,000, with an annual... Problem 17Q: What are examples of involuntary deductions employers are required to collect for employee and... Problem 18Q: What are the tax rates for FICA Social Security and FICA Medicare? What are the maximum taxable... Problem 19Q: What are FUTA and SUTA taxes? Is there any possible reduction in the FUTA tax rate? If so, what is... Problem 20Q: Use Figure 12.15 as a reference to answer the following questions. A. If an employee makes $1,400... Problem 1EA: Campus Flights takes out a bank loan in the amount of $200,500 on March 1. The terms of the loan... Problem 2EA: Consider the following accounts and determine if the account is a current liability, a noncurrent... Problem 3EA: Lamplight Plus sells lamps to consumers. The company contracts with a supplier who provides them... Problem 4EA: Review the following transactions and prepare any necessary journal entries for Olinda Pet Supplies.... Problem 5EA: Review the following transactions and prepare any necessary journal entries for Tolbert Enterprises.... Problem 6EA: Elegant Electronics sells a cellular phone on September 2 for $450. On September 6, Elegant sells... Problem 7EA: Homeland Plus specializes in home goods and accessories. In order for the company to expand its... Problem 8EA: Bhakti Games is a chain of board game stores. Record entries for the following transactions related... Problem 9EA: Following is the unadjusted trial balance for Sun Energy Co. on December 31, 2017. You are also... Problem 10EA: Barkers Baked Goods purchases dog treats from a supplier on February 2 at a quantity of 6,000 treats... Problem 11EA: Use information from EA10. Compute the interest expense due when Barkers honors the note. Show the... Problem 12EA: Scrimiger Paints wants to upgrade its machinery and on September 20 takes out a loan from the bank... Problem 13EA: Following are payroll deductions for Mars Co. Classify each payroll deduction as either a voluntary... Problem 14EA: Toren Inc. employs one person to run its solar management company. The employees gross income for... Problem 15EA: In EA14, you prepared the journal entries for the employee of Toren Inc. You have now been given the... Problem 16EA: An employee and employer cost-share pension plan contributions and health insurance premium... Problem 1EB: Everglades Consultants takes out a loan in the amount of $375,000 on April 1. The terms of the loan... Problem 2EB: Match each of the following accounts with the appropriate transaction or description. Problem 3EB: Pianos Unlimited sells pianos to customers. The company contracts with a supplier who provides it... Problem 4EB: Review the following transactions and prepare any necessary journal entries for Bernard Law Offices.... Problem 5EB: Review the following transactions and prepare any necessary journal entries for Lands Inc. A. On... Problem 6EB: Monster Drinks sells twenty-four cases of beverages on October 18 for $120 per case. On October 25,... Problem 7EB: McMasters Inc. specializes in BBQ accessories. In order for the company to expand its business, they... Problem 8EB: Following is the unadjusted trial balance for Pens Unlimited on December 31, 2017. You are also... Problem 9EB: Airplanes Unlimited purchases airplane parts from a supplier on March 19 at a quantity of 4,800... Problem 10EB: Use information from EB9. Compute the interest expense due when Airplanes Unlimited honors the note.... Problem 11EB: Whole Leaves wants to upgrade their equipment, and on January 24 the company takes out a loan from... Problem 12EB: Reference Figure 12.15 and use the following information to complete the requirements. A. Determine... Problem 13EB: Marc Associates employs Janet Evanovich at its law firm. Her gross income for June is $7,500.... Problem 14EB: In EB13, you prepared the journal entries for Janet Evanovich, an employee of Marc Associates. You... Problem 15EB: An employee and employer cost-share 401(k) plan contributions, health insurance premium payments,... Problem 1PA: Consider the following situations and determine (1) which type of liability should be recognized... Problem 2PA: Stork Enterprises delivers care packages for special occasions. They charge $45 for a small package,... Problem 3PA: Review the following transactions, and prepare any necessary journal entries for Renovation Goods.... Problem 4PA: Review the following transactions, and prepare any necessary journal entries for Juniper Landscaping... Problem 5PA: Review the following transactions, and prepare any necessary journal entries. A. On July 16, Arrow... Problem 6PA: Machine Corp. has several pending lawsuits against its company. Review each situation and (1)... Problem 7PA: Emperor Pool Services provides pool cleaning and maintenance services to residential clients. It... Problem 8PA: Serene Company purchases fountains for its inventory from Kirkland Inc. The following transactions... Problem 9PA: Mohammed LLC is a growing consulting firm. The following transactions take place during the current... Problem 10PA: Lemur Corp. is going to pay three employees a year-end bonus. The amount of the year-end bonus and... Problem 11PA: Record the journal entries for each of the following payroll transactions. Problem 1PB: Consider the following situations and determine (1) which type of liability should be recognized... Problem 2PB: Perfume Depot sells two different tiers of perfume products to customers. They charge $30 for tier 1... Problem 3PB: Review the following transactions, and prepare any necessary journal entries for Sewing Masters Inc.... Problem 4PB: Review the following transactions and prepare any necessary journal entries for Woodworking... Problem 5PB: Review the following transactions and prepare any necessary journal entries. A. On January 5, Bunnet... Problem 6PB: Roundhouse Tools has several potential warranty claims as a result of damaged tool kits. Review each... Problem 7PB: Shoe Hut sells custom, handmade shoes. It offers a one-year warranty on all shoes for repair or... Problem 8PB: Air Compressors Inc. purchases compressor parts for its inventory from a supplier. The following... Problem 9PB: Pickles R Us is a pickle farm located in the Northeast. The following transactions take place: A. On... Problem 10PB: Use Figure 12.15 to complete the following problem. Roland Inc. employees monthly gross pay... Problem 11PB: Use the information from PB10 to complete this problem. Record entries for each transaction listed. Problem 8Q: What is a contingent liability?
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What is a contingent liability ? Provide some examples of contingencies.
Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.
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