Professional Documents
Culture Documents
Current Liability
Current Liability
11-3(M & M)
• Current Liabilities
• Long-term mortgage-current portion 3200
• Accrued interest payable 2600
• withheld amount from paychecks 6100
• 11,900
• Long-term liabilities
• Mortgage note payable(800,000-3200) 796,800
• Note payable 75,000
• 871,800
Q 11-4(M&M)(a)
• Interest stated separately in note:
• Current liabilities:
• Note Payable 250,000
• Add: Interest payable 5000
255,000
Q 11-4(M&M)(b)
• Interest included in the face amount of note
• Current liabilities
• Note Payable 265,000
• Less: Discount on note payable 10,000
• 255,000
Original discount(250,000x1/2x12%) 15,000
Less: expired portion 5,000
Balance of discount 10,000
MM(11-5)
• Trucks 272,000
• Discount on note 23,040
• Cash 80,000
• Note payable 215,040
11-5 continue
• Dec.31
• Interest expense 11,520
• Discount on note payable 11,520
• 23040x9/18= 11520
11-5 continue
• Dec.31
• Depreciation expense 25,500
• Accumulated depreciation 25,500
• 272,000/8= 34,000x9/12=25,500
MM(11-6)
• 1,000,000X7.2/100= 72000X5 Years=
360,000
Accrued interest
72,000x15/360= 3000
MM-Problem11-4
• June1.
• Cash 20,000
• Note payable 20,000
MM-Problem11-4cont:
• July 19
• Office equipment 18,000
• Note payable 18,000
MM-Problem11-4cont:
• July 31
• Note Payable 20,000
• Interest expense 400
• Cash 20400
• Interest expense
20,000x12%x60/360=400
MM-Problem11-4cont:
• Sept.1
• Cash 240,000
• Discount on Note 4800
• Note payable 244,800
• Discount
240,000x8%=19,200x90/360=4800
MM-Problem11-4cont:
• Oct 1.
• Inventory 16,200
• A/c Payable 16,200
MM-Problem11-4cont:
• Oct 19
• Note payable 18,000
• Interest expense 450
• Cash 450
• Note Payable 18,000
• Interest 18000x10%x3/12=450
MM-Problem11-4cont:
Adjusting entries
Interest expense 207
Interest payable 207
16200x10%x30/360= +
135 18,000x12%x12/360=72
135+72=207
MM-Problem11-4cont:
• Adjusting entries
• Interest expense 3200
• Discount on note 3200
4800x60/90=3200
MM 11-7
Amortization table
Date Amount Interest Reduction Unpaid
payable expense in balance balance
1.1 15215
Income statement
• Interest expense $ 3244.32
How much current liability reported
in the balance sheet of 1996.
• BALANCE SHEET-1996
• Current liability
• Note payable due in one year $ 4766.36
How much non-current liability
reported in 1996
• BALANCE SHEET
• Non-current liability