Van Rushing Hunting Goods' fiscal year ends on December 31. At the end of the 2024 fiscal year, the company had notes payable of $12 million due on February 8, 2025. Rushing sold 2 million shares of its $0.25 par, common stock on February 3, 2025, for $9 million. The proceeds from that sale along with $3 million from the maturation of some 3-month CDs were used to pay the notes payable on February 8. Through his attorney, one of Rushing's construction workers notified management on January 5, 2025, that he planned to sue the company for $1 million related to a work-site injury on December 20, 2024. As of December 31, 2024, management had been unaware of the injury, but reached an agreement on February 23, 2025, to settle the matter by paying the employee's medical bills of $75,000. Rushing's financial statements were finalized on March 3, 2025 Required: 1. What amount(s) if any, related to the situations described should Rushing report among current liabilities in its balance sheet at December 31, 2024? 2. What amount(s) if any, related to the situations described should Rushing report among long-term liabilities in its balance sheet at December 31, 2024? 3. Assume that, as of March 3, management does not think it is probable that it will suffer a material loss because of the injury. What amount(s) if any, related to the situations described should Rushing report among current liabilities and long-term liabilities in its balance sheet at December 31, 2024 if the settlement agreement had occurred on March 15, 2025, instead? 4. What amount(s) if any, related to the situations described should Rushing report among current liabilities and long-term liabilities in its balance sheet at December 31, 2024 if the work-site injury had occurred on January 3, 2025, instead? Note: For all requirements, enter your answers in whole dollars.
Van Rushing Hunting Goods' fiscal year ends on December 31. At the end of the 2024 fiscal year, the company had notes payable of $12 million due on February 8, 2025. Rushing sold 2 million shares of its $0.25 par, common stock on February 3, 2025, for $9 million. The proceeds from that sale along with $3 million from the maturation of some 3-month CDs were used to pay the notes payable on February 8. Through his attorney, one of Rushing's construction workers notified management on January 5, 2025, that he planned to sue the company for $1 million related to a work-site injury on December 20, 2024. As of December 31, 2024, management had been unaware of the injury, but reached an agreement on February 23, 2025, to settle the matter by paying the employee's medical bills of $75,000. Rushing's financial statements were finalized on March 3, 2025 Required: 1. What amount(s) if any, related to the situations described should Rushing report among current liabilities in its balance sheet at December 31, 2024? 2. What amount(s) if any, related to the situations described should Rushing report among long-term liabilities in its balance sheet at December 31, 2024? 3. Assume that, as of March 3, management does not think it is probable that it will suffer a material loss because of the injury. What amount(s) if any, related to the situations described should Rushing report among current liabilities and long-term liabilities in its balance sheet at December 31, 2024 if the settlement agreement had occurred on March 15, 2025, instead? 4. What amount(s) if any, related to the situations described should Rushing report among current liabilities and long-term liabilities in its balance sheet at December 31, 2024 if the work-site injury had occurred on January 3, 2025, instead? Note: For all requirements, enter your answers in whole dollars.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Van Rushing Hunting Goods' fiscal year ends on December 31. At the end of the 2024 fiscal year, the
company had notes payable of $12 million due on February 8, 2025. Rushing sold 2 million shares of its
$0.25 par, common stock on February 3, 2025, for $9 million. The proceeds from that sale along with
$3 million from the maturation of some 3-month CDs were used to pay the notes payable on February
8.
Through his attorney, one of Rushing's construction workers notified management on January 5, 2025,
that he planned to sue the company for $1 million related to a work-site injury on December 20, 2024.
As of December 31, 2024, management had been unaware of the injury, but reached an agreement on
February 23, 2025, to settle the matter by paying the employee's medical bills of $75,000.
Rushing's financial statements were finalized on March 3, 2025
Required:
1. What amount(s) if any, related to the situations described should Rushing report among current
liabilities in its balance sheet at December 31, 2024?
2. What amount(s) if any, related to the situations described should Rushing report among long-term
liabilities in its balance sheet at December 31, 2024?
3. Assume that, as of March 3, management does not think it is probable that it will suffer a material
loss because of the injury. What amount(s) if any, related to the situations described should
Rushing report among current liabilities and long-term liabilities in its balance sheet at December
31, 2024 if the settlement agreement had occurred on March 15, 2025, instead?
4. What amount(s) if any, related to the situations described should Rushing report among current
liabilities and long-term liabilities in its balance sheet at December 31, 2024 if the work-site injury
had occurred on January 3, 2025, instead?
Note: For all requirements, enter your answers in whole dollars.
Answer is complete but not entirely correct.
$
12,000,000 X
0x
$
$ 12,000,000 X
$
0X
$ 12,000,000 X
$
0X
1. Current liability
2. Long-term liability
3. Current liability
3. Long term liability
4. Current liability
4. Long-term liability
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