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Current liabilities Bon Nebo Co. sold 25,000 annual subscriptions of Magazine 20XX for $85 during December20Y8. These new subscribers will receive monthly issues, beginning in January 20Y9. In addition, the business had taxable income of $840,000 during the first calendar quarter of20Y9. The federal tax rate is 40%. A quarterly tax payment will be made on April 12, 20Y9. Prepare the Current liabilities section of the balance sheet for Bon Nebo Co. on March31, 20Y9.

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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 11, Problem 1E
Textbook Problem
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Current liabilities

Bon Nebo Co. sold 25,000 annual subscriptions of Magazine 20XX for $85 during December20Y8. These new subscribers will receive monthly issues, beginning in January 20Y9. In addition, the business had taxable income of $840,000 during the first calendar quarter of20Y9. The federal tax rate is 40%. A quarterly tax payment will be made on April 12, 20Y9.

Prepare the Current liabilities section of the balance sheet for Bon Nebo Co. on March31, 20Y9.

To determine

Prepare the current liabilities section of the balance sheet for Corporation B on March 31, 20Y9.

Explanation of Solution

Current liabilities: Liabilities are debt and obligations of a business. Current liability is the obligation, which the company is responsible to pay the outsiders within a year.

Balance sheet: This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources, on a specific date. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the main elements of the balance sheet are assets, liabilities, and stockholders’ equity.

Prepare the current liabilities section of the balance sheet for Corporation B on March 31, 20Y9.

Corporation B

Balance Sheet (Partial)

March 31, 20Y9

Current Liabilities:  
Federal Income Taxes Payable (1)$336,000 
Advance on magazine subscriptions (2)$1,593,750 
Total Current Liabilities $1,929,750

Table (1)

Working notes:

Calculate the amount of federal income taxes payable...

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Chapter 11 Solutions

Financial Accounting
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