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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Problem Reporting Long-Term Debt

Fridley Manufacturing’s accounting records reveal the following account balances after adjusting entries are made on December 31, 2020.

Required:

Prepare the current liabilities and long-term debt portions of Fridley’s balance sheet at December 31, 2020. Provide a separate line item for each issue (do not combine separate bonds or notes payable), but some items may need to be split into more than one item.

Accounts payable

$ 62,500

Bonds payable (9.4%, due in 2027)

800,000

Lease liability*

41,500

Bonds payable (8.7%, due in 2023)

50,000

Deferred tax liability*

133.400

Discount on bonds payable

(94%, due in 2027)

12,600

Income taxes payable

26,900

* Long term liability

Interest payable

$ 38,700

Installment note payable (8%, equal

installments due 2021 to 2024)

120,000

Notes payable (7.8%, due in 2025)

400,000

Premium on notes payable

(7.8%, due in 2025)

6, [00

Note payable, 4% $50,000 face amount.

due in 2026 (net of discount)

31,900

To determine

Concept introduction:

Liabilities:

Liabilities are the obligation of the business or amount payable by the business. Liabilities can current or long term. Current liabilities are liabilities payable within the short term or business cycle of the company, for example Accounts payable for purchases and utilities payable. Long term liabilities are liabilities payable in a long period/ years, for example long term loan.

To prepare:

The Current Liabilities and Long term Liabilities sections of the balance sheet.

Explanation

Liabilities are the obligation of the business or amount payable by the business. Liabilities can current or long term. Current liabilities are liabilities payable within the short term or business cycle of the company, for example Accounts payable for purchases and utilities payable. Long term liabilities are liabilities payable in a long period /years, for example long term loan.

The Current Liabilities and Long term Liabilities sections of the balance sheet are as follows:

Fridley Manufacturing
Balance Sheet Extracts
As on Dec. 31, 2020
     
Current Liabilities:    
Accounts Payable $ 62,500  
Income tax payable $ 26,900  
Interest payable...

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