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Balance Sheet: Current Liability

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1). Balance Sheet Classification of Various Liabilities - How would each of the following items be reported on the balance sheet?

a). Accrued vacation pay.
b). Estimated taxes payable.
c). Service warranties on appliance sales.
d). Bank overdraft.
e). Personal injury claim pending.
f). Unpaid bonus to officers.
g). Deposit received from customer to guarantee performance of a contract.
h). Sales tax payable.
i). Gift certificates sold to customers but not yet redeemed.
j). Premium offers outstanding.
k). Discount on notes payable.
l). Employee payroll deductions unremitted.
m). Current maturities of long term debts to be paid from current assets.
n). Cash dividends declared but unpaid.
o). Dividends in arrears on preferred stock.
p). Loans from officers.

2). Adjusting Entry for Sales Tax - During the month of June, Danielle's Boutique had cash sales of $265,000 and credit sales of $153,700, both of which include the 6% sales tax that must be remitted to the state by July 15.

3). Payroll Tax Entries - The payroll of Delaney Company for September 2012 is as followers: Total payroll was $480,000, of which $140,000 is exempt from Social Security tax because it represented amounts paid in excess of $106,800 to certain employees. The amount paid to employees in excess $7,00 was $410,000. Income taxes in the amount of $80,000 were withheld, as was $9,000 in union dues. The state unemployment tax is 3.5% but Delaney Company is allowed a credit of 2.3% by the state for its unemployment experience. Also, assume that the current FICA tax is 7.65% on an employee's wages to $106,800 and 1.45% in excess of $106,800. No employee for Delaney makes more than $125,000. The federal enemployment tax rate is 0.8% after the state credit.

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Solution Summary

The balance sheet for current liabilities. The accrued vacation pay is determined in the solution.

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1.
(a) Current liability.
(b) Current liability.
(c) Current liability or long-term liability depending on term of warranty.
(d) Current liability.
(e) Current liability.
(f) Current liability.
(g) Current or non-current liability depending upon the time involved.
(h) Current liability.
(i) Current liability.
(j) Current liability.
(k) Current ...

Solution provided by:
Jayant Kumar, MBA
Education
  • MBA, Indian Institute of Finance
  • Bsc, Madras University
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