Exam 11: Current Liabilities

West Coast Outdoor Co.sold $22,000 worth of trampolines with a one year warranty.The company estimates that 2% of the sales will result in warranty work.West Coast Outdoor Co.should:

On September 15,Lohr Co.borrowed $50,000 from Close Bank.The loan had an interest rate of 12% and was due in 60 days. Prepare the journal entry for Lohr Co.to record the note.

Unearned revenues are:

Long-term liabilities are obligations of a company requiring payment within one year.

On December 31,2015,Peligrino Co.has a long term note payable of $800,000.Of that balance,$100,000 will be paid within one year from the balance sheet date.How much of the note payable should Peligrino Co.report as a long term liability when they prepare the December 31,2015 balance sheet?

Gross pay is the same as net pay.

On November 16,2015,Source for Sports gave Kinsmen Sports a 90-day,12%,$60,000 note payable to extend a past due account payable. Prepare the journal entry for Source for Sports to record the note and the extension of the past due account.

On November 16,Predator Company borrowed $112,000 from DT Bank.The loan had an interest rate of 10% and was due in 90 days.Predator Company's fiscal year-end is December 31. Prepare the journal entry to record the interest due at December 31.

West Coast Outdoor Co.estimates that warranty expense will be 1% of sales.The current period's sales were $740,000.The entry to record the warranty expense is:

The matching principle requires that the total interest expense be allocated over the term of the note.

Classify each of the following items as either: 1.Known current liability. 2.Estimated liability. 3.Contingent liability. Pending lawsuit Warranty liability on $150,000 worth of products sold Accounts payable Income taxes payable CPP payable Interest payable Environmental liability Property taxes payable Payroll taxes payable Unearned revenues

Estimated liabilities are also referred to as provisions.

An estimated liability:

Management can withhold any information regarding future events if releasing the information could cause a share price decline.

The relevance principle requires that contingent assets be recorded.

Amounts received in advance from a customer for future products or services are initially recorded as liabilities.

Accounts payable:

All expected future payments are liabilities.

A note payable can be used to extend the credit period for an account payable.

Employee vacation benefits: