solution keys - EXERCISE 13-1 (10-15 minutes) (a) Current...

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Unformatted text preview: EXERCISE 13-1 (10-15 minutes) (a) Current liability; financial liability. (b) Current asset. (c) Current liability or long-term liability depending on term of warranty; not a financial liability. (d) Current liability; financial liability. (e) Current liability; financial liability. (f) Current liability; financial liability. (g) Current or noncurrent liability depending upon the time involved; not a financial liability (if deposit will be returned then it would be a financial liability). (h) Current liability; financial liability. (i) Current liability; not a financial liability. (j) Current liability; not a financial liability. (k) Current liability; financial liability. (l) Footnote disclosure if assume not likely and/or not reasonably estimable. If assume likely and reasonably estimable then current or noncurrent liability depending upon the time involved; financial liability. (m) Current liability; financial liability. (n) Current liability; financial liability. (o) Footnote disclosure; not a financial liability. (p) Separate presentation in either current or long-term liability section; financial liability. (q) Current liability; financial liability. (r) Current or noncurrent liability depending upon the time involved; not a financial liability since usually does not involve payment of cash or other financial assets. (s) Current liability; financial liability. EXERCISE 13-2 (20-25 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 Notes Payable ........................ 50,000 (b) Dec. 31 Interest Expense ............................. 1,500 Interest Payable ..................... 1,500 ($50,000 X 12% X 3/12) Dec. 31 Interest Expense ............................. 1,500 Notes Payable ........................ 1,500 ($6,000 X 3/12) (c) (1) Note payable $50,000 Interest payable 1,500 $51,500 (2) Note payable $50,000 Interest accrued 1,500 $51,500 (d) Oct. 1/09 Interest Expense * ........................ 4,500 Interest Payable ............................ 1,500 Note Payable ................................. 50,000 Cash ....................................... 56,000 *($50,000 X 12% X 9/12) Oct. 1/09 Interest Expense ........................... 4,500 Notes Payable ....................... 4,500 Note Payable ................................. 56,000 Cash ....................................... 56,000 EXERCISE 13-2 (Continued) (e) Encino Note: Jan. 1 Interest Payable .............................. 1,500 Interest Expense .................... 1,500 Oct. 1 Interest Expense ............................. 6,000 Notes Payable ................................. 50,000 Cash........................................ 56,000 Bank Note: The use of reversing entries would be equally efficient for the noninterest-bearing note. If the efficient for the noninterest-bearing note....
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This note was uploaded on 02/02/2010 for the course ACCOUNTING 221 taught by Professor X during the Spring '10 term at University of Toronto- Toronto.

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solution keys - EXERCISE 13-1 (10-15 minutes) (a) Current...

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