Exercise 1

Company S had the following balances at December 31, 2012.

What is the amount of current liabilities?

Balance

Accounts payable

$50,000

Notes payable due on April 20, 2013

20,000

Notes payable due on April 20, 2014

20,000

Notes payable due on April 20, 2015

20,000

[Answer]

Current liabilities = $70,000

Balance

Accounts payable

$50,000

Notes payable due on April 20, 2013

20,000

Total current liabilities

$70,000

Exercise 2

Company AA had the following balances at December 31, 2012.

What is the amount of current liabilities?

Balance

Accounts payable

$50,000

Notes payable due on April 20, 2013

20,000

Salaries payable

7,000

Rent payable

4,000

Unearned revenue for services to be provided in January 2013

12,000

Prepaid insurance

2,000

Income taxes payable

25,000

[Answer]

Current liabilities = $118,000

Balance

Accounts payable

$50,000

Notes payable due on April 20, 2013

20,000

Salaries payable

7,000

Rent payable

4,000

Unearned revenue for service to be provided in January 2013

12,000

Income taxes payable

25,000

Total current liabilities

$118,000