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BE11-1 Jamison Company has the following obligations at December 31: (a) a note pay- able for $100,000 due in 2 years, (b) a 10-year mortgage payable of $300,000 payable in ten $30,000 annual payments, (c) interest payable of $15,000 on the mortgage, and (d) accounts payable of $60,000. For each obligation, indicate whether it should be classified as a current liability. (Assume an operating cycle of less than one year.)

BE11-1 Jamison Company has the following obligations at December 31: (a) a note pay- able for $100,000 due in 2 years, (b) a 10-year mortgage payable of $300,000 payable in ten $30,000 annual payments, (c) interest payable of $15,000 on the mortgage, and (d) accounts payable of $60,000. For each obligation, indicate whether it should be classified as a current liability. (Assume an operating cycle of less than one year.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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BRIEF EXERCISES BE11-1 Jamison Company has the following obligations at December 31: (a) a note pay- able for $100,000 due in 2 years, (b) a 10-year mortgage payable of $300,000 payable in ten $30,000 annual payments, (c) interest payable of $15,000 on the mortgage, and (d) accounts payable of $60,000. For each obligation, indicate whether it should be classified as a current liability. (Assume an operating cycle of less than one year.) Identify whether obligations are current liabilities. (LO 1) BE11-2 Peralta Company borrows $60,000 on July 1 from the bank by signing a $60,000, Prepare entries for an interest- 10%, one-year note payable. bearing note payable. (LO 1) (a) Prepare the journal entry to record the proceeds of the note. (b) Prepare the journal entry to record accrued interest at December 31, assuming adjust- ing entries are made only at the end of the year. BE11-3 Coghlan Auto Supply does not segregate sales and sales taxes at the time of sale. The register total for March 16 is $16,380. All sales are subject to a 5% sales tax. Compute sales taxes payable, and make the entry to record sales taxes payable and sales revenue. Compute and record sales taxes payable. (LO 1) BE11-4 Derby University sells 4,000 season basketball tickets at $210 each for its 12-game Prepare entries for unearned home schedule. Give the entry to record (a) the sale of the season tickets and (b) the reve- nue recognized by playing the first home game. revenues. (LO 1) BE11-5 Yahoo! Inc.'s recent financial statements contain the following selected data (in thousands). Analyze liquidity. (LO 2) $ 4,594,772 Current liabilities $1,717,728 2,417,394 Current assets Total assets 14,936,030 Total liabilities Compute (a) working capital and (b) current ratio. BE11-6 On December 1, Bruney Company introduces a new product that includes a one- year warranty on parts. In December, 1,000 units are sold. Management believes that 5% of the units will be defective and that the average warranty costs will be $90 per unit. Prepare the adjusting entry at December 31 to accrue the estimated warranty cost. Prepare adjusting entry for warranty costs. (LO 2)
Transcribed Image Text:BRIEF EXERCISES BE11-1 Jamison Company has the following obligations at December 31: (a) a note pay- able for $100,000 due in 2 years, (b) a 10-year mortgage payable of $300,000 payable in ten $30,000 annual payments, (c) interest payable of $15,000 on the mortgage, and (d) accounts payable of $60,000. For each obligation, indicate whether it should be classified as a current liability. (Assume an operating cycle of less than one year.) Identify whether obligations are current liabilities. (LO 1) BE11-2 Peralta Company borrows $60,000 on July 1 from the bank by signing a $60,000, Prepare entries for an interest- 10%, one-year note payable. bearing note payable. (LO 1) (a) Prepare the journal entry to record the proceeds of the note. (b) Prepare the journal entry to record accrued interest at December 31, assuming adjust- ing entries are made only at the end of the year. BE11-3 Coghlan Auto Supply does not segregate sales and sales taxes at the time of sale. The register total for March 16 is $16,380. All sales are subject to a 5% sales tax. Compute sales taxes payable, and make the entry to record sales taxes payable and sales revenue. Compute and record sales taxes payable. (LO 1) BE11-4 Derby University sells 4,000 season basketball tickets at $210 each for its 12-game Prepare entries for unearned home schedule. Give the entry to record (a) the sale of the season tickets and (b) the reve- nue recognized by playing the first home game. revenues. (LO 1) BE11-5 Yahoo! Inc.'s recent financial statements contain the following selected data (in thousands). Analyze liquidity. (LO 2) $ 4,594,772 Current liabilities $1,717,728 2,417,394 Current assets Total assets 14,936,030 Total liabilities Compute (a) working capital and (b) current ratio. BE11-6 On December 1, Bruney Company introduces a new product that includes a one- year warranty on parts. In December, 1,000 units are sold. Management believes that 5% of the units will be defective and that the average warranty costs will be $90 per unit. Prepare the adjusting entry at December 31 to accrue the estimated warranty cost. Prepare adjusting entry for warranty costs. (LO 2)
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