ASSIGNMENT 5
ACCT 201
Q.1When are the current liabilities reported ?Mention few examples of current
liabilities?
Current liability is reported if one of the following two conditions exists:
1. Liability is expected to be settled within its normal operating cycle; or
2. Liability is expected to be settled within 12 months after the reporting date.
Current Liability includes
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Accounts payable.
Notes payable.
Current maturities of long-term debt.
Short-term obligations expected to be refinanced.
Dividends payable.
Customer advances and deposits.
Unearned revenues.
Sales taxes payable.
Income taxes payable.
Employee-related liabilities.
Q2.Castle National Bank agrees to lend $100,000 on March 1, 2011, to Green
Landscape Company for which Green Landscape signs a $100,000, 6 percent,
four-month note. Green Landscape prepares financial statements semiannually.
REQUIRED:
Record journal entries in the books of green landscape company for cash receipt
from the bank, adjusting entry on 30th June and payment entry on maturity of
note payable on july 1st.
Date
March 1
June 30
July 1
Account
Cash
Note Payable
Interest Expenses (100,000 ×6%×4/12)
Interest Payable
Interest Payable
Note Payable
Cash
Dr.
100,000
Cr.
100,000
2,000
2,000
2,000
100,000
102,000