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.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

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Related questions

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.

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