ACC108 week 2 assignment

Liabilities Worksheet

Part 1. Current Liabilities

a. Define current liabilities, identify where they are reported, and provide two examples of these liabilities. Answer in the space below.

b. Paisley Electronics sells $16,500 in electronics equipment to customers on February 27. The sales tax rate on these sales is 6%. Prepare the journal entry to record the sales and the corresponding sales tax. Enter your answers in the shaded boxes below.

General Journal
Date	Account Names	Debit	Credit
Feb 27
	To record sales

c. Fiesta Entertainment sells $67,000 worth of tickets in advance of a 5-day food and wine festival running June 22-26. All sales were for cash.

Prepare the journal entries to record the advance ticket sales on June 15, and the revenue earned for the first day of the festival. Assume that each of the five days of the festival represents 1/5 of the advance ticket sales. Enter your answers in the shaded boxes.

General Journal
Date	Account Names	Debit	Credit
Jun 15
	To record unearned revenue

General Journal
Date	Account Names	Debit	Credit
Jun 22
	To record revenue earned

Part 2. Notes Payable

a. Tangerine Labs borrows $126,000 on March 28, by signing a 90-day, 8% note.

Prepare the journal entries to record the issuance of the note and the payment of the note at maturity.

General Journal
Date	Account Names	Debit	Credit
Mar. 28
	To record note

General Journal
Date	Account Names	Debit	Credit
Jun 25
	To record payment of note and interest

b. On November 1, Sommers Inc. borrows $180,000 by signing a 2-year, 5% note. Annual interest is paid on June 30. Sommers has a December 31 year-end.

Prepare the journal entries to record the issuance of the note and the accrued interest on December 31.

General Journal
Date	Account Names	Debit	Credit
Nov. 1
	To record note

General Journal
Date	Account Names	Debit	Credit
Dec. 31
	To record accrued interest on note

Part 3. Bonds

Winterbank Productions issues $4 million of 4-year, 8 percent bonds on January 1, 2013. Interest is payable on July 1 and January 1, and financial statements are prepared on December 31. Winterbank uses the straight-line amortization method.

a. Prepare the journal entries for 2013, assuming the bonds were issued at 98.

General Journal
Date	Account Names	Debit	Credit
Jan. 1

General Journal
Date	Account Names	Debit	Credit
Jul. 1
General Journal
Date	Account Names	Debit	Credit
Dec. 31

b. Prepare the journal entries for 2013, assuming the bonds were issued at 103.

General Journal
Date	Account Names	Debit	Credit
Jan. 1

General Journal
Date	Account Names	Debit	Credit
Jul. 1

General Journal
Date	Account Names	Debit	Credit
Dec. 31