Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition

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 ...