Chapter 10 and Appendix C and D Solutions

Accounting: Tools for Business Decision Making

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
ANSWERS TO QUESTIONS 1. While this is generally true, more precisely a current liability is a debt that can reasonably be expected to be paid: (a) from existing current as- sets or through the creation of other current liabilities and (2) within one year or the operating cycle, whichever is longer. 2. In the balance sheet, Notes Payable of $25,000 and Interest Payable of $562.50 ($25,000 X 9% X 3/12) should be reported as current liabilities. In the income statement, Interest Expense of $562.50 should be reported under other expenses and losses. 3. (a) Disagree. The company only serves as a collection agent for the taxing authority. It does not report sales taxes as an expense; it merely forwards the amount paid by the customer to the government. (b) The entry to record the proceeds is: Cash. .......................................................................................... 10,550 Sales. ................................................................................. 10,000 Sales Taxes Payable. ......................................................... 550 4. (a) The entry when the tickets are sold is: Cash. .......................................................................................... 720,000 Unearned Football Ticket Revenue. ................................... 720,000 (b) The entry after each game is: Unearned Football Ticket Revenue. ........................................... 144,000 Football Ticket Revenue. .................................................... 144,000 5. Three taxes commonly withheld by employers from employees’ gross pay are (1) federal income taxes, (2) state income taxes, and (3) so- cial security (FICA) taxes. 6. (a) Three taxes commonly paid by employers on employees’ salaries and wages are (1) social security (FICA) taxes, (2) state unemploy- ment taxes, and (3) federal unemployment taxes. (b) Taxes withheld from employees’ gross pay and not yet remitted to the appropriate government agency are reported in the balance sheet as current liabilities.
Background image of page 1

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

View Full DocumentRight Arrow Icon
7. (a) Long-term liabilities are obligations that are expected to be paid after one year. Examples include bonds and long-term notes. (b) Bonds are a form of interest-bearing notes payable used by corporations, universities, and governmental agencies. 8. (a) Secured bonds have specific assets of the issuer pledged as collateral. In contrast, unsecured bonds are issued against the general credit of the borrower. (b) Convertible bonds permit bondholders to convert them into common stock at their option. In contrast, callable bonds are subject to call and retirement at a stated dollar amount prior to maturity at the option of the issuer. 9. (a) Face value is the amount of principal due at the maturity date. (b)
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 23

Chapter 10 and Appendix C and D Solutions - ANSWERS TO...

This preview shows document pages 1 - 3. Sign up to view the full document.

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