Ch 13 answers - different book edition

Intermediate Accounting

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: SOLUTIONS TO EXERCISES EXERCISE 13-1 (10-15 minutes) (a) Current liability. (b) Current liability. (c) Current liability or long-term liability depending on term of warranty. (d) Current liability. (e) Current liability. (f) Current liability. (g) Current or noncurrent liability depending upon the time involved. (h) Current liability. (i) Current liability. (j) Current liability. (k) Current liabilities or long-term liabilities as a deduction from face value of note. (l) Footnote disclosure (assume not probable and/or not reasonably estimable). (m) Current liability. (n) Current liability. (o) Footnote disclosure. (p) Separate presentation in either current or long-term liability section. EXERCISE 13-2 (15-20 minutes) (a) Sept. 1 Purchases.............................................. 50,000 Accounts Payable........................ 50,000 Oct. 1 Accounts Payable................................. 50,000 Notes Payable.............................. 50,000 Oct. 1 Cash....................................................... 50,000 Discount on Notes Payable.................. 6,000 Notes Payable.............................. 56,000 (b) Dec. 31 Interest Expense................................... 1,500 Interest Payable........................... 1,500 ($50,000 X 12% X 3/12) Dec. 31 Interest Expense................................... 1,500 Discount on Notes Payable........ 1,500 ($6,000 X 3/12) (c) (1) Note payable $50,000 Interest payable 1,500 $51,500 (2) Note payable $56,000 Less discount ($6,000 – $1,500) 4,500 $51,500 EXERCISE 13-3 (10-12 minutes) Hattie McDaniel Company Partial Balance Sheet December 31, 2004 Current liabilities: Notes payable (Note 1) $250,000 Long-term debt: Notes payable refinanced in February 2005 (Note 1) 950,000 Note 1. Short-term debt refinanced. As of December 31, 2004, the company had notes payable totaling $1,200,000 due on February 2, 2005. These notes were refinanced on their due date to the extent of $950,000 received from the issuance of common stock on January 21, 2005. The balance of $250,000 was liquidated using current assets. OR Current liabilities: Notes payable (Note 1) $250,000 Long-term debt: Short-term debt expected to be refinanced (Note 1) 950,000 (Same Footnote as above.) EXERCISE 13-4 (20-25 minutes) Chris Atkins Company Partial Balance Sheet December 31, 2004 Current liabilities: Notes payable (Note 1) $3,400,000 Long-term debt: Notes payable expected to be refinanced in 2005 (Note 1) 3,600,000 Note 1. Under a financing agreement with Blue Lagoon State Bank the Company may borrow up to 60% of the gross amount of its accounts receivable at an interest cost of 1% above the prime rate. The Company intends to issue notes maturing in 2009 to replace $3,600,000 of short-term, 15%, notes due periodically in 2005. Because the amount that can be borrowed may range from $3,600,000 to $4,800,000, only $3,600,000 of the $7,000,000 of currently maturing debt has been reclassified as long-term debt. EXERCISE 13-5 (25-30 minutes)...
View Full Document

This document was uploaded on 07/29/2008.

Page1 / 45

Ch 13 answers - different book edition - SOLUTIONS TO...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online