Concept explainers
LO 1, 2, 3, 4
(Learning Objectives 1, 2, 3, 4: Measure and report current liabilities) At December 31, 2018, Filbert Corporation’s adjusted
Accrued Warranty Payable | $ 58,000 |
4% Notes Payable, due April 30, 2019 | 150,000 |
Unearned Service Revenue | 48,000 |
Accounts Payable | 225,000 |
Employee Income Tax Payable | 27,000 |
279,000 | |
Interest Payable | 29,000 |
8% Bonds Payable, due December 31, 2023 | 500,000 |
75,000 | |
164,000 | |
Salaries Payable | 84.000 |
5% Notes Payable, due December 31, 2019 | 200,000 |
Sales Tax Payable | 67,000 |
FICA Tax Payable | 7,000 |
Filbert Corporation provides multi-year warranties with its products. Half of the Accrued Warranty Liability relates to warranty liabilities that will be paid in 2019, while the other half relates to warranty liabilities to be paid in 2020. The Unearned Service Revenue pertains to a service contract that will be performed during 2019. $100,000 of the 8% bonds payable due December 31, 2023, is due on December 31. 2019.
Requirement
1. Prepare the current liability section of Filbert Corporation’s
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Financial Accounting (12th Edition) (What's New in Accounting)
- (Learning Objective 5: Apply GAAP for uncollectible receivables) The September 30,2019, records of West Point Communications include these accounts:Accounts Receivable.................................... $249,000Allowance for Doubtful Accounts............... (8,000)During the year, West Point Communications estimates Uncollectible-account expense at 1%of credit sales. At year-end (December 31), the company ages its receivables and adjusts thebalance in Allowance for Uncollectible Accounts to correspond to the following aging schedule:LO 5Age of Accounts1–30 Days 31–60 Days 61–90 Days Over 90 Days$132,000 $52,000 $15,000 $36,000Accounts Receivable$235,000Estimated percent uncollectible 0.5% 2% 15% 35%During the last quarter of 2019, the company completed the following selected transactions:Nov 30 Wrote o as uncollectible the $1,200 account receivable fromLooper Carpets and the $800 account receivable from Williams Antiques.Dec 31 Adjusted the Allowance for Uncollectible Accounts and…arrow_forward(Learning Objective 3: Account for a short-term note payable) Quimby Sports Authority purchased inventory costing $30,000 by signing a 6% short-term, one-year note payable. Thepurchase occurred on July 31, 2018. Quimby pays annual interest each year on July 31. Journalizethe company’s (a) purchase of inventory; (b) accrual of interest expense on April 30, 2019, which isthe company’s fiscal year-end; and (c) payment of the note plus interest on July 31, 2019. (Roundyour answers to the nearest whole number.) (d) Show what the company would report for liabilitieson its balance sheet at April 30, 2019, and on its income statement for the year ended on that datearrow_forwardThings to remember -The business began on August 1, 2018, and has selected a July 31, 2019, fiscal year-end. -Journalize Accounts Payable and Receivables in two separate steps. -Tax on Insurance (charged at 8%/0 is non refundable. Create journal entries for sage 50. ? 1. Negotiated a 5-year bank loan of $40000 at an annual interest rate of 9.50% with Loyal Bank. The money was deposited in the bank account today. 2.Received invoice 402 for $1200 plus HST from Captain Insurance, for a one-year business Insurance Policy, commencing Aug 1, 2018. Issued cheque #1001 to pay this invoice. 3.Purchased -office furniture and fixtures for $2500. -computer equipment for $3500. -from the business place, invoice 6488 was for $6000 plus HST paid cheque #1002arrow_forward
- (Learning Objective 5: Apply GAAP to uncollectible receivables) At December 31,2018, before any year-end adjustments, the Accounts Receivable balance of HamptonCompany, Inc., is $330,000. The Allowance for Uncollectible Accounts has a $15,400 creditbalance. Hampton prepares the following aging schedule for Accounts Receivable:Age of AccountsTotal Balance 1–30 Days 31–60 Days 61–90 Days Over 90 Days$330,000 $100,000 $70,000 $30,000Estimated uncollectible 0.6% 3.0% 5.0%$130,00040.0%Requirements1. Based on the aging of Accounts Receivable, is the unadjusted balance of the allowanceaccount adequate? Too high? Too low?2. Make the entry required by the aging schedule. Prepare a T-account for the allowance.3. Show how Hampton will report Accounts Receivable on its December 31 balance sheet.arrow_forwardLearning Objective 6: Apply GAAP for notes receivable) Markley Foodscompleted the following selected transactions.2018Oct 31 Sold goods to Basic Foods, receiving a $30,000, three-month, 5.25% note. (Youdo not need to make the cost of goods sold journal entry for this transaction.)Dec 31 Made an adjusting entry to accrue interest on the Basic Foods note.2019Jan 31 Collected the Basic Foods note.Nov 11 Loaned $15,800 cash to Straord Shops, receiving a 90-day, 10.0% note.Dec 31 Accrued the interest on the Straord Shops note.Requirements1. Record the transactions in Markley Foods’ journal. Assume that no sales returns areexpected. Round all amounts to the nearest dollar. Explanations are not required.2. Show what Markley Foods will report on its comparative classified balance sheet atDecember 31, 2019, and December 31, 2018, for Notes Receivable and Interest Receivable.arrow_forward2019 Ending Balances DEBITS CREDITS Cash 17,000 Marketable Securities 2,000 Accounts Rec. 14,000 Allowance for Bad Debt 2,000 Inventory 15,000 Prepaid Insurance 5,000 Land 30,000 Building 150,000 Accumulated Dep. - Building 45,000 Equipment 100,000 Accumulated Dep. - Equipment 20,000 Accounts Payable 9,000 Salaries Payable Unearned Revenue 2,000 Interest Payable Income Taxes Payable 3,000 Note Payable Bonds 100,000 Common Stock 50,000 Additional Pd-in-Capital 80,000 Retained Earnings 22,000 333,000 333,000 Complete the following journal entries for 2020. Insurance costing $18,000 was purchased on 6/1/20 (the same time in which the old policy expired. The new policy was for 12 months). On Dec. 31, 2020, 1000 shares of stock are repurchased from the market at $2.80/share (treasury stock). The tax rate is 20 percent. Income taxes for the current year are due and therefore paid…arrow_forward
- 2019 Ending Balances DEBITS CREDITS Cash 17,000 Marketable Securities 2,000 Accounts Rec. 14,000 Allowance for Bad Debt 2,000 Inventory 15,000 Prepaid Insurance 5,000 Land 30,000 Building 150,000 Accumulated Dep. - Building 45,000 Equipment 100,000 Accumulated Dep. - Equipment 20,000 Accounts Payable 9,000 Salaries Payable Unearned Revenue 2,000 Interest Payable Income Taxes Payable 3,000 Note Payable Bonds 100,000 Common Stock 50,000 Additional Pd-in-Capital 80,000 Retained Earnings 22,000 333,000 333,000 Complete the following journal entries. Inventory: Inventory purchases are $180,000, all on credit. All accounts payable is from inventory purchases; all but $12,000 of inventory purchased is paid by the end of the year. Additional equipment is purchased on 4/1/20 for $20,000 cash. All equipment when new, including the new purchase, has/had a 5-year life, no salvage value,…arrow_forward2019 Ending Balances DEBITS CREDITS Cash 17,000 Marketable Securities 2,000 Accounts Rec. 14,000 Allowance for Bad Debt 2,000 Inventory 15,000 Prepaid Insurance 5,000 Land 30,000 Building 150,000 Accumulated Dep. - Building 45,000 Equipment 100,000 Accumulated Dep. - Equipment 20,000 Accounts Payable 9,000 Salaries Payable Unearned Revenue 2,000 Interest Payable Income Taxes Payable 3,000 Note Payable Bonds 100,000 Common Stock 50,000 Additional Pd-in-Capital 80,000 Retained Earnings 22,000 333,000 333,000 Complete the following journal entries. Sales for 2020 are $330,000. All sales are on credit. Gross Margin ratio is 40 percent Accounts Receivable: $190,000 of the accounts receivable is paid by the end of the year (the remaining balance remains on the balance sheet). $4,000 of A/R is written off during the year. 5% of A/R (after write-off and collections) is considered to…arrow_forward2019 Ending Balances DEBITS CREDITS Cash 17,000 Marketable Securities 2,000 Accounts Rec. 14,000 Allowance for Bad Debt 2,000 Inventory 15,000 Prepaid Insurance 5,000 Land 30,000 Building 150,000 Accumulated Dep. - Building 45,000 Equipment 100,000 Accumulated Dep. - Equipment 20,000 Accounts Payable 9,000 Salaries Payable Unearned Revenue 2,000 Interest Payable Income Taxes Payable 3,000 Note Payable Bonds 100,000 Common Stock 50,000 Additional Pd-in-Capital 80,000 Retained Earnings 22,000 333,000 333,000 Complete the following jounral entries: Salaries are $2,200 per month (12 months of salaries expense must be booked). It is expected that one-half month will be owed on 12/31/20 because of when payday falls (therefore, 11.5 months of salaries have been paid and ½ month is still owed to the employees at year end). $56,000 in cash is borrowed on 9/30/20 by issuing a Note…arrow_forward
- Ellsworth Enterprises borrowed $425,000 on an 8%, interest-bearing note on September 30, 2020. Ellsworth ends its fiscal year on December 31. The note was paid with interest on May 31, 2021. Prepare the adjusting entry for this note on December 31, 2020. Account Names DR CR Blank 1. Fill in the blank, read surrounding text. Blank 2. Fill in the blank, read surrounding text. Blank 3. Fill in the blank, read surrounding text. Blank 4. Fill in the blank, read surrounding text. Blank 5. Fill in the blank, read surrounding text. Blank 6. Fill in the blank, read surrounding text. Blank 7. Fill in the blank, read surrounding text. Blank 8. Fill in the blank, read surrounding text. Blank 9. Fill in the blank, read surrounding text. Blank 10. Fill in the blank, read surrounding text. Blank 11. Fill in the blank, read surrounding text. Blank 12. Fill in the blank, read surrounding text. Blank 13. Fill in the blank, read surrounding text. Blank 14. Fill in the blank,…arrow_forward(Learning Objectives 1, 4, 5, 6: Apply GAAP for revenue, receivables, collections,and uncollectibles using the percent-of-sales method; account for notes receivable) LincolnDelivery Corporation is an overnight shipper. Since it sells on credit, the company cannotexpect to collect 100% of its accounts receivable. At December 31, 2018, and 2019,respectively, Lincoln reported the following on its balance sheet (in millions of dollars):December 31,2019 2018Accounts receivable.................................................. $4,300 $3,900Less: Allowance for uncollectible accounts...............Accounts receivable, net........................................... $4,110 $3,690(190) (210)During the year ended December 31, 2019, Lincoln earned service revenue and collected cashfrom customers. Assume uncollectible-account expense for the year was 3% of service revenueon account and that Lincoln wrote off uncollectible receivables and made other adjustmentsas necessary (see below). At year-end,…arrow_forward(Learning Objective 6: Apply GAAP for notes receivable) Record the followingnote receivable transactions in the journal of Windham Golf. How much interest revenue didWindham earn this year? Use a 365-day year for interest computations, and round interestamounts to the nearest dollar. Windham Golf has a December 31 fiscal year-end.1 Loaned $17,000 cash to Jill Wateman on a one-year, 8% note.6 Performed service for Fairway Pro, receiving a 90-day, 10% note for$14,000.16Company.31 Accrued interest revenue for the year.Received a $5,000, six-month, 5% note on account from Paulsonarrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning