Purchase Solution

Preparing a current and long term liability section of a balance sheet

Not what you're looking for?

Ask Custom Question


The following items are extracted "in a random order" from the accounting records of MST Corp for the period ended December 31, 2002

Accounts payable 65,600
Accrued Liabilities 11,347
6 % Bonds payable, due Feb 1, 2003 100,000
8% Bonds payable, due June 1, 2003 250,000
Unamortized bond discount (8% bonds of 2003) 260
11% Bond payable, due June 1, 2012 300,000
Unamortized bond premium (11% bonds of 2012) 1,700
Accrued interest payable 7,333
Bond interest expense 61,000
Other interest expense 17,000
Notes payable (short-term) 110,000
Lease payment obligations - Capital lease 23,600
Pension obligation 410,000
Unfunded obligations for post retirement benefits 72,000
Deferred Income tax 130,000
Income Tax expense 66,900
Income Tax payable 17,300
Operating Income 280,800
Net Income 134,700
Total assets 2,093.300

Other information
1. The 6% Bonds due in Feb 2003 will be refinanced in Jan 2003 through the issuance of $ 150,000 in 9%, 20 years bonds.
2. The 8% Bonds due June 2003 will be repaid entirely.
3. MST Corp is committed to total lease payments of $ 14,400 in 2003. Of this amount, $ 7,479 is applicable to operating leases and $ 6,921 to capital leases. Payments on capital leases will be applied as follows: $ 2,300 to interest expense and $ 4.621 to reduction in the capitalized lease payment obligation.
4. MST pension plan is fully funded with an independent trustee.
5. The obligation for postretirement benefits other than pensions consists of a commitment to maintain health insurance for retired employees. During 2003, MST will fund $ 18,000 of this obligation.
6. The $ 17,300 income tax payable relates to income tax of 2002 and must be paid on or before March 15, 2003. No portion of the deferred tax liability is regarded as a current liability.

1. Using this information, prepare the current and long term liabilities sections of the balance sheet as of Dec 31, 2002.
2. Explain briefly how the information in each of the six paragraphs will affect your presentation of the company's liabilities and the net income of 2003


Early in 2000, ABC Corp. was organized with authorization to issue 100,000 shares of 100 par value preferred stock and 500,000 shares of 1 par value common stock. Ten thousand shares of preferred stock were issued at par and 170,000 shares of common stock were sold for 15 per share. The preferred stock pays an 8% cumulative dividend and is callable at 105.
During the first 4 years of operations, the corporation earned a total of 1,025,000 and paid dividends of 0.75 per share each year on its outstanding common stock

1. Prepare the stockholder's equity section of the Balance sheet at December 2003. Include a supporting schedule showing your computation of the amount of retained earnings reported
2. Are there any dividends in arrear on the company's preferred stock at the end of 2003? Explain your answer.

Purchase this Solution

Solution Summary

The solution discusses current and long term liability section of a balance sheet.

Solution provided by:
  • Chartered Accountant (Equivalent to CPA in US), Institute of Charted Accountants of India
  • Bachelor of Commerce, West Bengal University
Recent Feedback
  • "I got this feedback and I wanted to know if you can explain it to me. I noticed something within your workings which I believe is incorrect.  It looks like you've mistaken the Debt ratio for the Equity Multiplier.  You've done a calculation to determine Return on Equity (ROE) but if you take a look at the ratios provided for us you'll see ROE listed on the bottom line already.  You can use ROE, Profit Margin and Total Asset Turnover to figure out the Equity Multiplier amount.  Equity multiplier is not provided for us and we need to calculate it.  I really hope this is helpful to you.  "
  • "Very attentive to detail. Answers are designed in easy to understand format."
  • "Fast response and thorough answer"
  • "thank you very much! "
  • "thank you so much !!!!!!!"
Purchase this Solution

Free BrainMass Quizzes
Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.


This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Operations Management

This quiz tests a student's knowledge about Operations Management