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.|
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 ...