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Group A
LO 1, 2, 3, 4
(Learning Objective 1, 2, 3, 4: Measure and report current liabilities) Sea Air Marine experienced these events during the current year.
a. December revenue totaled $120,000; and, in addition, Sea Air collected sales tax of 5%. The tax amount will be sent to the state of Florida early in January.
b. On August 31, Sea Air signed a six-month, 6% note payable to purchase a boat costing $86,000. The note requires payment of principal and interest at maturity.
c. On August 31, Sea Air received cash of $2,400 in advance for service revenue. This revenue will be earned evenly over six months.
d. Revenues of $850,000 were covered by Sea Air’s service warranty. At January 1, accrued warranty payable was $11,800. During the year, Sea Air recorded warranty expense of $34,000 and paid warranty claims of $34,500.
e. Sea Air owes $90,000 on a long-term note payable. At December 31, 10% interest for the year plus $30,000 of this principal are payable within one year.
Requirement
1. For each item, indicate the account and the related amount to be reported as a current liability on the Sea Air Marine
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Chapter 8 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
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Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning