As of December 31 of the current year, Petersen Corporation has prepared the following information regarding its liabilities and other obligations. Notes payable, of which $12,000 will be repaid within the next 12 months $80,000 Interest expense that will result from existing liabilities over the next 12 months 125,000 Lawsuit pending against Petersen, in which $600,000 is claimed in damages. Legal counsel can make no reasonable estimate of the company’s ultimate liability at this time 600,000 20-year bond issue that matures in two years. The entire amount will be repaid from a bond sinking fund 900,000 Accrued interest on the 20-year bond issue as of the balance sheet date 36,000 Three-year commitment to John Hoskins as chief financial officer at a salary of $275,000 per year 825,000 Note payable due within 90 days (but that is approved to be extended for an additional 18 months) 75,000 Cash deposits from customers for goods and services to be delivered over the next nine months 300,000 Income taxes, of which $100,000 are currently payable and the remainder deferred indefinitely 185,000 Instructions Prepare a listing of the Petersen Corporation’s current and long-term liabilities as they should be presented in the company’s December 31 balance sheet. Briefly explain why you have excluded any of the listed items in your listing of current and long-term liabilities.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

As of December 31 of the current year, Petersen Corporation has prepared the following information regarding its liabilities and other obligations.

Notes payable, of which $12,000 will be repaid within the next 12 months $80,000

Interest expense that will result from existing liabilities over the next 12 months 125,000

Lawsuit pending against Petersen, in which $600,000 is claimed in damages. Legal counsel can make no reasonable estimate of the company’s ultimate liability at this time 600,000

20-year bond issue that matures in two years. The entire amount will be repaid from a bond sinking fund 900,000

Accrued interest on the 20-year bond issue as of the balance sheet date 36,000

Three-year commitment to John Hoskins as chief financial officer at a salary of $275,000 per year 825,000

Note payable due within 90 days (but that is approved to be extended for an additional 18 months) 75,000

Cash deposits from customers for goods and services to be delivered over the next nine months 300,000

Income taxes, of which $100,000 are currently payable and the remainder deferred indefinitely 185,000

Instructions

Prepare a listing of the Petersen Corporation’s current and long-term liabilities as they should be presented in the company’s December 31 balance sheet.

Briefly explain why you have excluded any of the listed items in your listing of current and long-term liabilities.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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