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Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition by Donald E. Kieso, Paul D. Kimmel, Jerry J. Weygandt

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EXERCISE 10-1

Purpose: (L.O. 1) This exercise tests your ability to distinguish between current and long-term liabilities.

_______ 1. Obligation to supplier for merchandise purchased on credit. (Terms 2/10, n/30).
________ 2. Note payable to bank maturing 90 days after balance sheet date.
________ 3. Note payable due January 1, 2017.
________ 4. Property taxes payable.
________ 5. Interest payable on note payable.
________ 6. Sales taxes payable.
________ 7. Portion of mortgage obligation due in years 2016 through 2020.
________ 8. Revenue received in advance, to be earned over the next six months.
________ 9. Wages and salaries payable.
________ 10. Rent payable.
________ 11. Short-term notes payable.
________ 12. Pension obligations maturing in ten years.
________ 13. Installment loan payments due three months after the balance sheet date.
________ 14. Installment loan payments due more than one year after the balance sheet date.
________ 15. Portion of mortgage obligation due within a year after the December 31, 2014 balance sheet date.
________ 16. Note payable maturing March 1, 2015.

Instructions:

Indicate whether each of the above items would be reported as a current liability (C) or a long-term liability (LT) on a balance sheet prepared at December 31, 2014.

Approach: Review the definition of a current liability. Analyze each situation above and determine if the liability will fall due within a year (or operating cycle) of the balance ...

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