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Indigo Corp. has manufactured a broad range of quality products since 1994. The operating cycle of the business is less than one year. The following information is available for the company's fiscal year ended February 28, 2023. Indigo follows ASPE.

Indigo Corp. has manufactured a broad range of quality products since 1994. The operating cycle of the business is less than one year. The following information is available for the company's fiscal year ended February 28, 2023. Indigo follows ASPE.

FINANCIAL ACCOUNTING
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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(a) Prepare the current liability section of the February 29, 2023 balance sheet of Indigo. (Round answers to O decimal places, e.g. 5,275.) Current Liabilities Accounts Payable Accounts Payable Liability to Affiliated Company Notes Payable GST Payable Dividends Payable Bonus Payable Unearned Revenue Accrued Liabilities INDIGO CORP. Statement of Financial Position (Partial) February 29, 2023 Total current liabilities $ $
Transcribed Image Text:(a) Prepare the current liability section of the February 29, 2023 balance sheet of Indigo. (Round answers to O decimal places, e.g. 5,275.) Current Liabilities Accounts Payable Accounts Payable Liability to Affiliated Company Notes Payable GST Payable Dividends Payable Bonus Payable Unearned Revenue Accrued Liabilities INDIGO CORP. Statement of Financial Position (Partial) February 29, 2023 Total current liabilities $ $
Indigo Corp. has manufactured a broad range of quality products since 1994. The operating cycle of the business is less than one year. The following information is available for the company's fiscal year ended February 28, 2023. Indigo follows ASPE. 1. 2. 3. 4. 5. 6. 7. Indigo has $3.7 million of bonds payable outstanding at February 29, 2023, which were issued at par in 2012 and are due in 2032. The bonds carry an interest rate of 7%, payable semi-annually each June 1 and December 1. 8. Indigo has several notes payable outstanding with its primary banking institution at February 29, 2023. In each case, the annual interest is due on the anniversary date of the note each year (same as the due dates listed). The notes are as follows: Due Date Apr. 1, 2023 Jan. 31, 2024 Show Transcribed Text Mar. 15, 2024 Oct. 30, 2025 Amount Due $156,000 192,000 504,000 246,000 Interest Rate 7% 8% 6% 7% Indigo uses the expense approach to account for assurance-type warranties. The company has a two-year warranty on selected products, with an estimated cost of 1% of sales being returned in the 12 months following the sale, and a cost of 1.5% of sales being returned in months 13 to 24 following the sale. The warranty liability outstanding at February 28, 2022, was $5,800. Sales of warrantied products in the year ended February 29, 2023, were $159,000. Actual warranty costs incurred during the current fiscal year are as follows: Warranty claims honoured on 2021-2022 sales Warranty claims honoured on 2022-2023 sales 3 $4,700 900 $5,600 c The accounts payable subsidiary ledger shows balances of regular trade payables for supplies and purchases of goods and services on open account. Included in the net balance of $398,000 are accounts with credit balances totalling $418,000 and accounts with debit balances totalling $20,000 at February 29, 2023. Included in trade payables is a short term loan of $21,000 owing to an affiliated company. The following information relates to Indigo's payroll for the month of February 2023. Indigo's required contribution for El is 1.4 times the employee contribution; for CPP, it is 1.0 times the employee contribution. Salaries and wages outstanding at February 29, 2023 For the last payroll of the year, the following unpaid balances apply: El withheld from employees CPP withheld from employees Income taxes withheld from employees Union dues withheld from employees $220,000 9,600 17,200 48,600 21,900 Indigo regularly pays GST owing to the Receiver General for Canada on the 15th of the month. Indigo's GST transactions include the GST that it charges to customers and the GST that it is charged by suppliers of goods and services. During February 2023, purchases attracted $27,300 of GST, while the GST charged on invoices to customers totalled $38,900. At January 31, 2023, the balances in the GST Receivable and GST Payable accounts were $33,200 and $60,000, respectively. Other miscellaneous liabilities included $51,000 of dividends payable on March 15, 2023; $35,000 of bonuses payable to company executives (75% payable in September 2023 and 25% payable in March 2024); and $81,000 in accrued audit fees covering the year ended February 29, 2023. Indigo sells gift cards to its customers. The company does not set a redemption date and customers can use their cards at any time. At March 1, 2022, Indigo had a balance outstanding of $98,000 in its Unearned Revenue account. Indigo received $20,000 in cash for gift cards purchased during the current year, and $37,400 in redemptions took place during the year. Based on past experience, 15% of customer gift card balances never get redeemed. At the end of each year, Indigo recognizes 15% of the opening balance of Unearned Revenue as earned during the year.
Transcribed Image Text:Indigo Corp. has manufactured a broad range of quality products since 1994. The operating cycle of the business is less than one year. The following information is available for the company's fiscal year ended February 28, 2023. Indigo follows ASPE. 1. 2. 3. 4. 5. 6. 7. Indigo has $3.7 million of bonds payable outstanding at February 29, 2023, which were issued at par in 2012 and are due in 2032. The bonds carry an interest rate of 7%, payable semi-annually each June 1 and December 1. 8. Indigo has several notes payable outstanding with its primary banking institution at February 29, 2023. In each case, the annual interest is due on the anniversary date of the note each year (same as the due dates listed). The notes are as follows: Due Date Apr. 1, 2023 Jan. 31, 2024 Show Transcribed Text Mar. 15, 2024 Oct. 30, 2025 Amount Due $156,000 192,000 504,000 246,000 Interest Rate 7% 8% 6% 7% Indigo uses the expense approach to account for assurance-type warranties. The company has a two-year warranty on selected products, with an estimated cost of 1% of sales being returned in the 12 months following the sale, and a cost of 1.5% of sales being returned in months 13 to 24 following the sale. The warranty liability outstanding at February 28, 2022, was $5,800. Sales of warrantied products in the year ended February 29, 2023, were $159,000. Actual warranty costs incurred during the current fiscal year are as follows: Warranty claims honoured on 2021-2022 sales Warranty claims honoured on 2022-2023 sales 3 $4,700 900 $5,600 c The accounts payable subsidiary ledger shows balances of regular trade payables for supplies and purchases of goods and services on open account. Included in the net balance of $398,000 are accounts with credit balances totalling $418,000 and accounts with debit balances totalling $20,000 at February 29, 2023. Included in trade payables is a short term loan of $21,000 owing to an affiliated company. The following information relates to Indigo's payroll for the month of February 2023. Indigo's required contribution for El is 1.4 times the employee contribution; for CPP, it is 1.0 times the employee contribution. Salaries and wages outstanding at February 29, 2023 For the last payroll of the year, the following unpaid balances apply: El withheld from employees CPP withheld from employees Income taxes withheld from employees Union dues withheld from employees $220,000 9,600 17,200 48,600 21,900 Indigo regularly pays GST owing to the Receiver General for Canada on the 15th of the month. Indigo's GST transactions include the GST that it charges to customers and the GST that it is charged by suppliers of goods and services. During February 2023, purchases attracted $27,300 of GST, while the GST charged on invoices to customers totalled $38,900. At January 31, 2023, the balances in the GST Receivable and GST Payable accounts were $33,200 and $60,000, respectively. Other miscellaneous liabilities included $51,000 of dividends payable on March 15, 2023; $35,000 of bonuses payable to company executives (75% payable in September 2023 and 25% payable in March 2024); and $81,000 in accrued audit fees covering the year ended February 29, 2023. Indigo sells gift cards to its customers. The company does not set a redemption date and customers can use their cards at any time. At March 1, 2022, Indigo had a balance outstanding of $98,000 in its Unearned Revenue account. Indigo received $20,000 in cash for gift cards purchased during the current year, and $37,400 in redemptions took place during the year. Based on past experience, 15% of customer gift card balances never get redeemed. At the end of each year, Indigo recognizes 15% of the opening balance of Unearned Revenue as earned during the year.
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