Solution Graded Assignment _1FINAL - Current Liab

Solution Graded Assignment _1FINAL - Current Liab -...

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Click to edit Master subtitle style Solution Graded Assignment #1 Current Liabilities BUSACC1205 Spring 2010
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2007 Jan 5 No entry is made for a line of credit until a loan is made. Any available line of credit would be disclosed in a footnote to the financial statements, assuming it is material.
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Jan 31 Cash 1,000,000 Loan payable - current 1,000,000 To record the loan of $1 million from First National Bank. Terms 12 months (due January 31, 2008), 8% interest payable at maturity.
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March 1 Cash 300,000 Unearned Revenue 300,000 To record receipt of the deposit for the furniture order.
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Sept 1 Truck 100,000 Cash 40,000 Note Payable 60,000 To record the purchase of a truck with cash and a two year 6% note.
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Oct 1- Promotional expense 630,000 Dec 31 Est Promotion Liability 630,000 To record the expected cash outflow for rebates related to qualifying sales made in October through December. (7000x$100x90% = $630,000) Oct 1- Est Promotion Liability 200,000 Dec 31 Cash 200,000 To record the cash payments for rebates.
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Nov 1 Cash 300,000 Unearned revenue* 200,000 Sales revenue 500,000 To record the sale, representing half the order. Note: the Inventory/COGS entry is not
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